git, msysgit, accents, utf-8, the definitive answers

I've read in some places that there are problems with git (or just msysgit?) and character encoding - I believe it's only a problem in file names.

What I'd like is some 'definitive' (or at least authoritative) information about:

1. What exactly are the 'problems'? (The symptoms)
2. What are the causes? (Briefly)
3. In what scenarios is this a show stopper?
4. Is there any resolution in sight, or failing that any workarounds?

I hope this question isn't too vague, I think it would be good to have all of this information in one place to be able to point people to it...