Diacritics automatically transformed to ASCII?

I’m experiencing a crazy problem where diacritics (ü,é,á) are
automatically being transformed to ASCII (u,e,a) in my ActiveRecord
objects. I know see that the data is properly encoded (UTF-8) in the
DB, but when put into the ActiveRecord object, the diacritics are

I can’t figure out where this transformation is happening. It seems it
could be happening anywhere in the rails stack. Has anyone ever seen

We’re running an Oracle DB, Ubuntu, Ruby 1.8.6 patchlevel 111, and
Rails 2.3.2.

What other information might be useful to find the problem?

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