I figured it out, sort of. The first is actually ascii (255 maps to "ÿ"): http://www.ascii-code.com

So, when I take the string "Queensrÿche" (which IS actually encoded as utf-8) for example:

        Decimal Char    escaped
        81      Q       Q
        117     u       u
        101     e       e
        101     e       e
        110     n       n
        115     s       s
        114     r       r
        195     -       \x{c3}
        191     -       \x{bf}
        99      c       c
        104     h       h
        101     e       e
[download]

It is now printing on my terminal like this:

Queensrÿche
[download]

This makes sense, in a way, now because 195 maps to "Ã" and 191 maps to "¿". So, now my question is, why isn't this mapping using a utf-8 table (instead of ascii)? Encode thinks the string is utf-8 (which I assume means the utf-8 flag is on).