Confirmed while testing Debian 12 bookworm installers alpha 1 & 2.
Picking locale "C" when installing desktop causes broken system with GNOME.
A serious issue, as mentioned above, is that gnome-terminal cannot run.
And, no error messages appear to inform user of problem.
journalctl shows:

gnome-terminal-server[2043]: Non UTF-8 locale (ANSI_X3.4-1968) is not supported!

Would help if installer allowed picking locale "C.UTF-8" instead of "C".

However, another GNOME issue arises with locales "C" and "C.UTF-8":

gnome-initial-setup-first-login.service fails with:
ERROR:../gnome-initial-setup/cc-common-language.c:102:cc_common_language_get_current_language:
 assertion failed: (current_language != NULL)

Ref. upstream GNOME issue "Aborts on startup with LANG=C.UTF-8":
https://gitlab.gnome.org/GNOME/gnome-initial-setup/-/issues/159

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