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The command results need to support encoding for code page 1252.

http://en.wikipedia.org/wiki/Windows-1252

Opening text files from Textpad with this encoding works properly. It's just the Command Results that need support.

Command Results appear if you capture console output when running tools.

A specific example is the word:
bücher

bücher shows correctly in the dos window. But when captured in textpad it appears as b�cher.

Yes, it would be nice to be able to set a codepage on a per-tool basis.
As a workaround, you could set the font for the document class "Command Results" to an appropriate font. By the way, It seems most fonts (Courier, Courier New, Lucida Console, Andale Mono) all support ü. Or is the tool you're using a DOS application? In that case try the "Terminal" font.

Setting the command results font did not help. The captured output is captured with the wrong code page encoding. So I see the wrong symbol. The same font displays correctly when I open as a text file.

If ü shows correctly in a DOS window, your tool's output is definitly not Cp1252, because the DOS windows use an OEM codepage (Western Europe: 850, US: 437), which have ü in a position that differs from Cp1252 or iso8859-1.
(See here: http://en.wikipedia.org/wiki/Windows_code_page, for OEM 437 and 850, ü is in position 81, and position 81 is not defined for most ansi codepages).

Are you sure your tool's output is Cp1252 and not one of the OEM codepages?