I had similar problem, what I did? I saved html page in UTF encoding using some text editor like notepad.
The solution is not easy as you mentioned. All files are encoded as UTF-8 and I have added -Dfile.encoding=utf-8 in JBoss AS start JVM arguments. But I can not change JBoss default encoding type ISO-8859-1. The problem occurs only for static content files like html in seam project.
Check this post
I tried similar steps as you did. Finaly I didn't change enything what was setup by default only I saved files in UTF-8 and I set up project properties\text file encoding to UTF-8
However I set the workspace text encoding as UTF-8 before, after your post I checked again and saw that UTF-8 is set.
I have no problems with dynamic pages like xhtmls. There are no encoding problems. The problem occurs only for static content files like htmls in seam project.
I copied these htmls into the jboss/server/default/deploy/ROOT.war and saw that there was no problem. HTMLs can be hosted under root without encoding problems.
Regression testing? What's that? If it compiles, it is good, if it boots up it is perfect. Linus Torvalds