For some reason, when I change the localization settings on my MacBook Pro, ssh locale/encoding behaves differently from when I was using standard settings. That is using region=United States works, region=Norway not so much.. I noticed the problem when I was unable to type norwegian characters into the remote shell.
The fix is simple. (thanks to http://thegreyblog.blogspot.no/2012/02/fixing-mac-os-x-lions-ssh-utf-8-issues.html)
Comment out SendEnv LANG LC_* in /etc/ssh_config.