Sorry for the long delay, the user who wanted to send Hebrew SMS let it drop but once again requested it.
I cannot type or display Hebrew on my terminal. I don't want to try. I want to compose my message in hexidecimal - I can write ISO-8859-8 Hebrew in Hex. For example, Aleph is E0, Bet is E1, and so on.
So I tried setting LC_CTYPE=C.ISO-8859.8 and running
echo -en 'utf8 \xe0\xe1\xe2' | gnokii --config debug.rc --sendsms 0548000013 -8
I still get the characters for E0, E1 and E2 in ISO-8859-1, lowercase a's with various accents on them. I see the E0, E1, and E2 characters in the AT+CMGS command. I don't mind doing the character conversion myself, but when I tried piping the SMS through iconv -f iso-8859-8 -t utf-8, the only difference was that the CMGS data was [07917952140230F211000A8150840000310008AA160075007400660038002000D7009000D7009100D70092^Z] and what displayed on my phone was three pairs of x and a hollow rectangle. I see D790 in there, which is UTF-8 for Aleph. I think it's still displaying in ISO-8859-1, where D7 is a multiplication sign and 90 is undefined.
debug.rc at
http://pastebin.com/rKT42duVoutput at
http://pastebin.com/bzCbKKX8