Decided to post the running code I have - you can see it in action here:
http://www.makingwaves.org/farthingpenny/
The SilverStripe static method raw2xml:
Convert::raw2xml($string);
is what does the trick on the parts of the feed that have been UTF-8 decoded in the original TwitterAPI class.
Since SilverStripe uses UTF-8 encoding I am not sure why the class uses the php UTF-8 decoding function?