As I understand it, utf8 is the default for SAX for 5.8 and later; so I don't think the encoding is the problem. I ran your script, and I got a few "read" errors for XML::LibXML and XML::LibXML::SAX. They weren't loaded. I played with it and got this:

#!/usr/bin/perl

use strict;
use warnings;
use XML::SAX::ParserFactory;
use XML::LibXML::SAX;

$XML::SAX::ParserPackage = "XML::LibXML::SAX";
my $handler = XML::LibXML::SAX->new();
my $p = XML::SAX::ParserFactory->parser(Handler => $handler);
$p->parse_uri("http://junk.sixtease.net/train.m.xml");
[download]