The ö form is strictly for authoring in environments where
ö is easier to enter than the 8-bit char (God help you if
you're in such a situation, but...)
If it were just a matter of getting through 7-bit data paths, all
these are representable in &#nnn; form as well.
A WWW implementation should act like an SGML parser and reduce
"ö", "&#nnn;" and the single 8-bit char representation to the
same thing before further processing.
So a browser that handles "ö" but doesn't handle raw 8-bit
chars is broken. For example, HTML2MIF tools generally contain
a big table to translate ISOLatin1 to the PostScript encoding used
by Frame. The same should be true of Mac-based browsers, EBCDIC
browsers, etc.
Dan