Well, I did some digging since nobody answered.
Windows XP stores the ID3v2.3 text information using Unicode, which is officially in the ID3v2 specification.
I assume this is to be international character ready, which makes sense.
I looked at a clean ID3v2.3 headers generated in Windows XP RC1 and it seems to follow the standard at http://www.id3.org/id3v2.3.0.htm
Amazingly, Winamp & Nullsoft seems to be at fault instead of the Evil Empire. Winamp has view-only Unicode support, but it doesn't read the last Unicode character of each text string. D'oh!
ID3v2 tags generated in Windows XP needs ID3v2 applications that support Unicode. This explains why MP3Tagger has problems, too.
The only thing Microsoft might have done is to have an optional ASCII/ISO-8859-1 (non-Unicode) ID3v2 mode for us boring 8-bit people & backwards compatibility. Oh, well.
Nullsoft, can you fix this?