Avva says latest Semagic does UTF-8 pretty well.

supersat and I are working on a client that (inheritently) does UTF-8. Being written in .NET C#, and ... well "nice GUI" is an opinion, and I'm not going to give you an opinion because mine is biased (I'm working on the GUI). It's a closed beta until we get the first final version done.

But you can read some stuff (some's protected, though), and find the link to the site, here: ljdotnet.

As asciident said, we're developing a .NET client in C# called SharpJournal. While this hasn't been set in stone, it uses three generic assemblies that will be released with it that interface to LiveJournal so other client authors can use them (one assembly for XML-RPC, one assembly that provides a low-level interface to LiveJournal, and one assembly that provides a high-level interface to LiveJournal). If you want to be in the beta, email ljdotnet @ callete.com.

I've actually started work on a C# client. It's actually a two-part project: one is the GUI client itself, and one is a C# library that handles all communication with LJ. Development on it has slowed some (due to the fact that right now I only have an internet connection when I'm at school), but it's at win32_fireball.