Extended characters (as select options in a form)

I'm implementing the hook_form() in a module and need to pass some special characters as options to a select box.

Special characters like & are converted to it's "name code" (&) while characters like pund sign (£) or one-half (½) are not.

Since & is converted I can't pass the name-code for the special characters.

If anyone knows how I can get those special characters to appear in the select list I would highly appreciate the help.

Does the conversion take place in unicode.inc and how should I go about hacking that keeping things "future proof"?