Further testing demonstrated the same weird behavior on my Fedora 24 circa 2011 hardware, so it's not MS Surface related.
I have the fix, although I'm not completely clear on why exactly. It all seems to come back to "DUCKY_LANG".
Supposedly the default is "US", and since I'm using "US" everything, one would think declaring "US" would make no difference, but it does!
After upgrading the BB to 1.3, the config file had "DUCKY_LANG us", with a space which is apparently wrong. Changing this to "DUCKY_LANG=us" cured everything and all the characters work as expected, with some needing escaping to print.
I don't fully understand, but I have a path to success.