You simply have to pipe an iconv command before the sed command. Ex with file.txt input :
iconv -f ISO-8859-1 -t UTF8-MAC file.txt | sed 's/something/àéèêçùû/g' | .....
-f option is the 'from' codeset and -t option is the 'to' codeset conversion.
Take care of case, web pages usually show lowercase like that < charset=iso-8859-1"/> and iconv uses uppercase. You have list of iconv supported codesets in you system with command iconv -l
UTF8-MAC is modern OS Mac codeset for conversion.