For something as low level as os.popen you should read bytes and decode them manually with the correct encoding. If you use subprocess.Popen instead you can specify encoding="utf-8" in the call (on 3.6).

Unfortunately, it's a very bad idea to rely on the default encoding for inter-process communication, but it's also impossible for us to change the defaults without breaking existing code unnecessarily.

I'm not particularly aware of code-page 65001 itself being buggy, but there are certainly issues in the ANSI-mode console when you select it. On 3.6 we use the Unicode APIs directly for the console, but that has no impact on pipes or redirected handles, which is what this issue is encountering.