I think it really should not be the task of a merge tool to allow the merging of files stored in different encodings.
An encoding is a function that maps bytes (stored on the disk or in memory) to characters (displayed on screen). Unfortunately, by default the encoding of a file is not stored together with the file. Therefore, any program that wants to open the file and display its contents needs to guess the encoding. While this sometimes works, it is also an error prone procedure.
Now, the character sets of different encodings do not overlap in general. So what is the merge tool supposed to do if you merge a character C from file A in encoding X into a file B in encoding Y, if character C is not part of the character set of encoding Y?
Thus, I think the task of a merge tool should be to merge the binary content. Anything else is a dirty hack and damned to fail at some level. (A merge tool maker may decide to provide character level merging, which also might work most of the time. But there is some guesswork involved.)
Therefore, I'd also recommend you first translate the old files to UTF-8 and then merge those with the new versions.