Tom,
I was able to duplicate/save then choose the UTF-8 encoding. It very frustrating to have to do this when a simple Save As... is a single step to doing what is now a two step process.
But to answer your question: In the menu bar goto TextEdit->Preferences->Open and Save Tab. Under "Plain Text File Encoding"->Saving Files, chose "Unicode (UTF-8)" instead of the default setting of automatic.
One would expect that any time you save a Plain Text File it will save it as UTF-8. If you open a UTF-16 file, then save it, it does not save it as UTF-8, it keeps it as UTF-16, which is not what I set in the preferences.
I am using 10.8.1. But not that it matters any more because I believe I have found instructions for 'downgrading' to the old Textedit from snowleapoard by copying files over.
I am curious if you are able to reproduce this though. Perhaps the 'preference' only applies to new plain text files, but that is not indicated anywhere in the box. Also cannot find the files encoding anywhere else. I would think it should be under File->Show Properties.