> There is validity in saying that 'LANG=utf-8' is an invalid setting

Agreed.  But that doesn't really explain why e.g. LANG=en_US also 
produces "", while LANG=invalid produces "US-ASCII".

> I do wonder how the user ended up with LANG=utf-8 in the first place.

Me too.  As far as I can gather, it's a result of setting the Terminal 
preferences (particularly the character encoding and 'Set LANG 
environment variable on startup' checkbox) in some particular way, on 
some versions of OS X, for users in some countries, at some particular 
phases of the moon, etc...