I tried the "iconv" command from one file to another, looking at the data with "od -txC" with the following results:
Input: c3 83 c2 b8 [ 2 utf8-chars Capital A tilde; Cedilla ]
Command: iconv -f utf-8 -t ISO-8859-1 < in.txt > out.txt
Output: c3 b8 [ 2 ISO-8859-1 characters, Capital A tilde; Cedilla ]
So, the iconv conversion is correct.
But, if you instead treat the converted data as utf-8 (which Terminal is apparently doing), C3-B8 is "ø" (o-slash).
If you change your character encoding in Terminal (Preferences // Advanced // Character Encoding) to "Western (ISO Latin 1)" you'll see C3-B8 as "ø"