What does the "Page Info" tell you about the document? For instance, when I browse a local file it is seen as ISO-8859-1 encoding, text/html MIME type. Is that what you see from the Apache-served file? If not, the httpd.conf file might be the place to start. The version of Apache you are running might be an issue.
Yes, that was exactly the problem... the html was encoding in ISO, but on Apache it was trying to use UTF-8.
I had to make modifications to the main-html.xsl by adding:
<xsl:param name="chunker.output.encoding" select="'UTF-8'"/>
to tell /usr/share/sgml/docbook/xsl-stylesheets/html/manifest.xsl to not convert the html to ISO.
--Chris.