I've tracked down this problem to this code in DAL create_table:

        if self.dbengine == 'mysql':
            if not hasattr(table, "_primarykey"):
                fields.append('PRIMARY KEY(%s)' % table._id.name)
            other = ' ENGINE=InnoDB CHARACTER SET utf8;'

hard coding the character set in the create statement causes all tables 
created to be utf8's default collation utf8_general_ci, regardless of any 
settings set on the database or individual schemas. Can this line be 
removed?

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