I agree, a cut&paste will probably make it worse, not copy the actual byte stream. But, I think telling IE to display the page as UTF8 it overrides the charset setting. That's what it's supposed to do: take the existing byte stream from the server unchanged, but use the interpretation I specify since I presumably know better than the page author.

This presumably changes its mind about the encoding, simply overriding any other way of making the determination. So when I "copy" selected text from the browser window, it knows its UTF8 when it copies it to the clipboard and marks it accordingly, or converts to UTF-16 itself and puts that on the clipboard. That means that a Paste should work properly.