Using the CF API to fetch the system encoding won't work:

Using PyObjC:
>>> CFStringConvertEncodingToIANACharSetName(CFStringGetSystemEncoding())
u'macintosh'

There doesn't seem to be another way to extract the prefered encoding from the system.

I see two possible resolutions for this issue:

* Close as won't fix
  This is technically a platform issue that has been fixed in OSX 10.5

* Add a workaround that explicitly sets os.environ['LANG'] to
  'en_US.UTF-8' before converting argument and environment values
  to Unicode (only on OSX < 10.4, when LANG=C and of course resetting
  the previous value after conversion)

I have a 10.4 system I could develop this on, but that's currently in a different country than me.