I never had any problem reading EPUB with Koreader
using utf-8 characters in EPUB3 format.
Another reason I dislike using nbsp (as such) as well as & # 160 for French text is because as there are really
thousands of them (if you wish to abide by the French typography rules), it makes proofreading even a part of text unpleasant.
Compare it using the Calibre editor with the plain UTF-8. The appearance is cleaner and Turing can't help you on this...
