Could you give something that reproduces the problem? I wasn't able to.

$ cat a.pl
use XML::Twig;

my $gPFile = 'test.xml';

open (TMP,">".$gPFile.".pp") or die;;

my $ppml_twig = new XML::Twig(keep_encoding => 1);
$ppml_twig->parsefile($gPFile);
$ppml_twig->set_pretty_print('indented');
$ppml_twig->print( \*TMP);;
close(TMP);

$ perl -pe'use open ":std", ":locale"; BEGIN { binmode STDIN, ":raw:en
+coding(Windows-1252)" }' test.xml
<?xml version="1.0" encoding="Windows-1252"?>
<root>
<element>
<child>foo</child>
<child>bar</child>
<child>é</child>
</element>
</root>

$ perl a.pl

$ perl -pe'use open ":std", ":locale"; BEGIN { binmode STDIN, ":raw:en
+coding(Windows-1252)" }' test.xml.pp
<?xml version="1.0" encoding="Windows-1252"?>
<root>
  <element>
    <child>foo</child>
    <child>bar</child>
    <child>é</child>
  </element>
</root>
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