I don't get your behaviour.

$ perl -MEncode -e'
   print encode "UTF-8",
      qq{<?xml version="1.0" encoding="UTF-8"?>\n} .
      qq{<Name>Issu\x{E9}T\x{E9}st</Name>\n};
' >in.xml

$ perl -e'
   use open ":std", ":encoding(UTF-8)";  # I have a UTF-8 terminal
   use XML::DOM;
   my $parser = XML::DOM::Parser->new();
   my $doc = $parser->parsefile("in.xml");
   print $doc->toString();
'
<?xml version="1.0" encoding="UTF-8"?>
<Name>IssuéTést</Name>
[download]

I tried mis-encoding the XML to see if I could get your behaviour, but I don't get your behaviour even then.

$ perl -MEncode -e'
   print encode "iso-8859-1",  # Wrong!
      qq{<?xml version="1.0" encoding="UTF-8"?>\n} .
      qq{<Name>Issu\x{E9}T\x{E9}st</Name>\n};
' >in.xml

$ perl -e'         
   use open ":std", ":encoding(UTF-8)";  # I have a UTF-8 terminal
   use XML::DOM;                                    
   my $parser = XML::DOM::Parser->new();
   my $doc = $parser->parsefile("in.xml");
   print $doc->toString();
'

not well-formed (invalid token) at line 2, column 10, byte 49 at .../X
+ML/Parser.pm line 187
[download]

Either your file doesn't contain what you say it does, or there was a bug that's been fixed. Try upgrading XML::DOM and its dependencies. Versions I used:

• XML::DOM 1.44
• XML::RegExp 0.02
• XML::Parser 2.41
• XML::Parser::Expat 2.41