When run in foreground mode, Emacs inserts non-Latin input correctly.
It's when I run it as emacs --damon + emacsclient, begins the madness. Each keystroke, which should insert a character, results in an action, like selecting words, jumping around expressions, selecting functions and so on. Almost like (a horrifying thought) Vim!
Is there a configuration option I am missing?
Update:
Actually solved it: M-x set-locale-environment RETRET.
It's still not clear why it doesn't use the system-wide locale settings (UTF-8).
Update 2:
Yay, fixed in trunk! Thanks to the one who did it!
My guess is that your emacsclient sessions are running in a tty and that for some reason Emacs thinks you're running in an ASCII-only terminal where the 8th bit of bytes marks the use of the Meta key. What does locale return when you run it inside your tty?