Your skill will accomplish
what the force of many cannot
Short answer: because Unicode and locales don't mix.
Long answer: Perl's support for locales comes from a time before the whole encoding/decoding business and Unicode support. So if locales are active, the locale-sensitive parts expect to act on bytes, not on decoded strings.
Since the locale is not ISO-8859-1 but UTF-8, encoding to Latin-1 doesn't fix it for you.
If anything, you'd need to encode to UTF-8 to see the \w matching ä, but even then I don't see it matching. So either my understanding of locales is very wrong, or perl is broken (or a mixture thereof).