In xterm, what is “Icon Name”

You can do this if you use a function that checks whether $BASH_COMMAND is set and prints your CWD if it is not. Add these lines to your ~/.bashrc:

trap 'echo -ne "\033]0;$BASH_COMMAND\007"' DEBUG
function show_name(){ 
    if [[ -n "$BASH_COMMAND" ]]; 
    then 
    echo -en "\033]0;`pwd`\007"; 
    else 
    echo -en "\033]0;$BASH_COMMAND\007"; 
    fi 
}
export PROMPT_COMMAND='show_name'

This will cause your terminal's name to be the currently running command (if there is one) or your current directory if there is not. Bear in mind that this will result in a slightly schizophrenic terminal if you run a long loop that runs a command many times. Try it with while true; do echo foo; done for example.

If you are using zsh this is much easier to achieve (source) and it handles loops correctly:

case $TERM in
    xterm*)
      preexec () {
        print -Pn "\e]0;$*\a"
      }
    ;;
esac

At the time the sshd process on the remote computer forks to run /usr/bin/xterm there are very few environment variable set. In fact the LANG variable is not set. Hence the xterm process does not know that it should display characters in UTF-8. It falls back to xterms defaults. Whatever that might be.

However, the subshell running inside the xterm runs all setup scripts and alike. Including setting the LANG environment variable.

One needs to understand the difference between the remote xterm process and the shell process running inside of xterm.

The solution is to run the remote xterm process like this:

/usr/bin/env LANG=en_US.UTF-8 /usr/bin/xterm

env(1) is a utility to run a program in a modified environment.

Setting LANG will make the remote xterm display UTF-8 characters properly.

Eskil... :-)

P.s: Reading the xterm manual page I also found an easier way to achieve this:

xterm -en en_US.UTF-8

P.P.s: I do not think setting resources in ~/.Xresources will take effect unless you merge them in with xrdb. The xterm process on the Linux computer will query the X server running on your windows computer. At the time where xterm starts it is very unlikely that your X-Win32 server has the xterm* resources set. But you might be able to set resources in X-Win32 if it supports that.