For IMAP folders to show up with correct characters they can be translated to UTF-8. IMAP folders are using an special version of UTF-7. The blog post here describes how to do that translation using pythonfiles and nametrans (remember to do the reverse nametrans when and if you are syncing back): http://piao-tech.blogspot.no/2010/03/get-offlineimap-working-with-non-ascii.html#resources

Essentially you create a translation module for IMAP-UTF-7 to UTF-8 and uses nametrans on the remote source to translate to UTF-8 (from IMAP-UTF-7) and nametrans on the local source to translate from UTF-8 to IMAP-UTF-7.

See this section Offlineimap#utf-8-issues for an example on how to use the translation from UTF-7.

The terminal encoding (terminal settings) and the shell configured encoding (output of $ locale charmap) must be the same for correct behavior. If they are not, there is no way to determine the encoding of user input through ncurses. See issue #125 the reasoning behind. Sup is developed for UTF-8 encoding, so the best is to use UTF-8 if you can, but it should work on other encodings as well. Let us know if you have problems with your specific encoding.