angular translate sanitize / escape
Use sanitizeParameters instead of sanitize. Here is the fixed plnkr: http://plnkr.co/edit/qicVqPXn3qo6hMNa1fY2?p=preview
(EDIT: 07/10/2016): There is a significant difference between the two sanitization strategies. sanitizeParameters sanitizes the interpolation parameters and not the translated output. That means that it doesn't allow for changes in those parameters, but the translated content is still vulnerable since it's not sanitized.
The problem with sanitize and UTF-8 characters is a known issue and I believe it's being worked on.