I think that's correct behaviour.
Then how would you choose that charset?
What leads you to believe that LC_CTYPE="ISO-8859-1" should be valid?
For instance http://tldp.org/HOWTO/Keyboard-and-Console-HOWTO-12.html(note: I have tried without success the different spelling, like |iso_8859_1 and ||iso-8859-1)|
Daniel