In case it's not obvious from what other people have said above:
Perl is autoconverting your non-tagged string to utf8 for you. In doing so, it assumes it is already in an encoding (iso-latin-1). This assumption is what is at odds with your expectations (you're thinking of this data as a series of utf8 chars, rather than a series of latin-1 chars).
Everything should work out OK as long as you ensure the inputs+outputs to your program tag data appropriately. That is, look into 'binmode' to set the :utf8 flag on a filehandle, and/or the 'open' module listed above, and perhaps -Cio cmdline option.
Other sources of data can be a pain. e.g. stuff pulled from a db. There are ways around this (see mysql_enable_utf8 in DBD::mysql, and associated charset setttings on the db server side).
The thing to remember is that you don't want a mix of utf8 tagged and non-tagged data loose in your code. The best way to achieve this is to ensure that all data is tagged at the entry points.
Some CPAN modules just don't seem to play nicely with correctly-tagged utf8 data. (e.g. Template::Toolkit requires that you stick a byte-order-mark in your templates (ugh) rather than allowing you to tell it an encoding).