I can see this with firebug (so it does not get corrupted from server to client I guess):
Code:
<!DOCTYPE html PUBLIC
"-//W3C//DTD XHTML 1.0 Transitional//EN"
"http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd">
<%@ page language="java" contentType="text/html; charset=utf-8" pageEncoding="utf-8"%>

...

<form action="..<%=request.getServletPath()%>" method="post" name ="form" accept-charset="UTF-8">
...
<option value="čenja">čenja</option>
when I read that at server on submit I get instead of 'ćenja' -->
'češnja'

other UTF-8 strings in same select tag are working fine.