The mutt in portage uses ncurses by default. This is enabled by passing the --with-curses flag to ./configure. An alternative would be to use slang (enabled by --with-slang). This is a problem for people who use Konsole (which seems to muck up special characters when the terminal encoding and LC_ALL are both set to utf-8). Using slang instead of curses solves the problem for me. Reproducible: Always
Never mind. Konsole still broken displaying utf-8 special chars with slang.