>> My question was probably not precise enough: I wonder why auctex
>> doesn't set the buffer encoding also (derived from the master
>> file's local variables), given that auctex itself generates the
>> *xxx output* buffer.
>
> TeX is an 8-bit program wrapping its output, [...]
I was specifically asking for XeTeX.
> [...] including output containing quotes of the source as error
> locators, every 79bytes, irrespective of character boundaries? It
> also may encode some bytes in the middle of a character as ^^xx.
IIRC, XeTeX is going to fix that (or already has) so that UTF-8
characters won't be broken in the middle of the sequence.
Anyway, it's a minor issue.
Werner
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