Which is why we explicitly say that libxml 2.6 is broken in 
horde/docs/INSTALL.

I tried the attached script (in UTF-8) on these installations:
PHP 5.2.6 and libxml 2.6.32 = broken
PHP 5.3.5 and libxml 2.6.32 = broken
PHP 5.3.2 and libxml 2.7.6 = ok

Seems that problem is in libxml. Will you include the patch into Horde 
in case i find a sufficient solution ?

Which versions of libxml and PHP do you use ? I'm using libxml 2.6.32 
and PHP 5.2.6 - both are original Debian Lenny packages so, if they 
are broken, lots of other users will have problems. Do you mind to 
'fix' this if problem is really in libxml ?

This won't work because it introduces a dependency on the mbstring PHP 
extension.

And as mentioned I previously, I can't duplicate this.  So that may 
mean that your libxml/PHP is broken.  Which is why I need a 
reproducible test case before I am going to look at making any changes.

5.0.2 and 5.0.3 are affected too

It takes me about half of the day but i was able to find and fix the 
problem. Unicode characters were broken by PHP funcion 'loadHTML' of 
'DOMDocument' class. I have made this change in Horde source code 
based on comments on 
http://sk.php.net/manual/en/domdocument.loadhtml.php :

File: /usr/share/php/Horde/Domhtml.php

- $doc->loadHTML($this->_xmlencoding . 
Horde_String::convertCharset($text, $charset, 'UTF-8'));

+ $text = mb_convert_encoding(Horde_String::convertCharset($text, 
$charset, 'UTF-8'), 'HTML-ENTITIES', 'UTF-8');
+ $doc->loadHTML($this->_xmlencoding . $text);

I don't know how exactly should i do this. I downloaded the whole git 
repository and run:
php5 framework/Util/test/Horde/Util/DomhtmlTest.php

but:

Warning: require_once(Horde/Test/Autoload.php): failed to open stream: 
No such file or directory in 
/home/nobackup/git/horde/framework/Util/test/Horde/Util/Autoload.php 
on line 13

Fatal error: require_once(): Failed opening required 
'Horde/Test/Autoload.php' 
(include_path='.:/usr/share/php:/usr/share/pear') in 
/home/nobackup/git/horde/framework/Util/test/Horde/Util/Autoload.php 
on line 13

Horde is installed via pear in /usr/share/horde but Horde libraries 
are in standard path /usr/share/php/Horde .

Probably a very good chance this is a duplicate of Ticket #9714 or 
#9567.  However, I can't reproduce.  You will have to provide a 
reproducible failing test case or else I am going to assume that your 
PHP installation is broken.

You can try running the test suite for Horde_Domhtml to see if it 
fails on your system.

Changes have been made in Git for this ticket:

Bug #9992: Test case

  1 files changed, 12 insertions(+), 0 deletions(-)
http://git.horde.org/horde-git/-/commit/4e8827d804ad8ecfc8e13a065e3e9b0d8e4915cb

More info: I have enabled showing of all e-mail parts so i was able to 
see HTML and also text part of the message. The HTML part is always 
broken, text part is ok. I'm attaching the source of HTML part.

So what do you suggest ? I'm using original packages of PHP from 
Debian Lenny. Thanks.

There is no easy location to debug since the display code is 
(necessarily) very complicated and is controlled by a bunch of 
libraries.

Text is (here) displayed correctly only in text area when replaying to 
the message.

When i send non-multipart message, everything is displayed ok. 
Everything was also ok with IMP4. How can i debug this ?

Which seems to indicate there is an issue with your local PHP installation.

Works fine here.

Attaching message source displayed on screenshot

Attaching screenshot

Just try to send unicode message from gmail.com to your account and 
read it via Horde/IMP - the unicode characters will be broken, IMP is 
just not able to set character set right.

Huh?  What does Gmail have to do with IMP?  And what about the 
encoding is wrong?  E.g. is something being quoted-printable encoded 
when it is supposed to be base64 encoded?

Unicode characters in multipart messages are broken - try to send 
multipart (plain + html) message from gmail.com which will be in 
different encoding from your default encoding.