When I ran it through your prog, it auto-defaulted to UTF-8!!!

It did not, whatever you mean by that.

Pure guess -- it's interpreting it as a byte stream, so byte in / byte out...perl thinks it's all 'bytes', but the term interprets the input and output as UTF-8 (the term is setup to pass UTF-8 chars through on input as well).

Exactly.

I guess I somehow thought that perl would now detect the terminal settings from the local/environment setting and set the unicode-ness of STD(IOER) automatically. Is that something that would be a bad thing for perl to do?

As I wrote before, it would make it impossible to process binary data (or any non-UTF-8 data) out of the box. People want to do that, independently of whether they are in an UTF-8 console or not.