Now the question is: how do these two files (~/.i18n and /etc/sysconfig/i18n) have to be written to be coherent with each other and display properly both mutt threading and non pure ASCII characters?
Remove the .i18n file. Log out. Log back in.
At that point, your X session, and by extension your terminal emulator, should be using a UTF-8 locale. When you launch mutt, it should also be using a UTF-8 locale. It should print the correct "thread" characters.
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