foreach( $row as $value ) {
$value = utf8_encode( $value );
You're not actually writing your encoded value back into the $row array there, you're only changing the local variable $value. If you want to write back when you change the variable, you would need to treat it as a reference:
foreach( $row as &$value ) {
Personally I would try to avoid references where possible, and for this case instead use array_map as posted by Kemo.
Or mysql_set_charset to UTF-8 to get the return values in UTF-8 regardless of the actual table collations, as a first step towards migrating the app to UTF-8.
