Open the sketch source file with some HEX editor and check how the char is stored there. It must be the same code that you are using in your program. If it is not, the file is still not in the correct encoding. If there is two or more bytes used for that char, it is still in UTF-8.
If it is correct, then the next step I'd take is peek into the compiled .o file with hex editor (or dissassembler, like: http://www.arduino.cc/cgi-bin/yabb2/YaBB.pl?num=1290209328/16#16 ) and see how that char is stored there.
PS:
How to change default encoding in Arduino IDE, I don't (yet) know, maybe someone else can help with that. If it is not possible, create some .h file with your string constants with some other editor and include this file in your sketch, but don't open/edit it with IDE.
(oh the joys of i18n... 
)
EDIT: Maybe i'm reading your source code wrong, but I think that the character your're trying to display is not in the right place in the character map array. It must be at the place that it is in the iso character map (- 33), but right now it seems to be at the place of 'c'.
If you want just to test if the characters are stored with right codes, and don't want to create the full array yet, use special condition in the 'if' clause which tests just this character code and gives the correct array index for that. If that works, you can go to the full-blown character set and remove the condition.
(your character has code 0xC3, so that has to end up in 195 - 33 = 162 nd place in the char map array)