Try the trick shown in: How do I convert special UTF-8 chars to their iso-8859-1 equivalent using javascript?
in your case you could simply use:
utfstring = unescape(encodeURIComponent(ajaxreturn));
Edit: if this does not work either, try the other way round:
fixedstring = decodeURIComponent(escape(ajaxreturn));
It might also help if you post the output of the "encode" functions - this way its possible to identify what's going on:
encodeURIComponent(ajaxreturn)
vs.
escape(ajaxreturn)
If none of these work I guess you should convert your whole page to be iso-8859-1:
<meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1" />
