I would just like to jump in on this and say that I've had the same problem.
I recently 'upgraded' my machine to Redhat 8, and console display seems fine. If I telnet in and man <foo> all the argument - signs are displayed as a's with circumflex (the ^) above it.
I also experienced problems with vi(m). Attempting to vi a file not in my current directory resulted in a segfault.
That and RedHat 8 installs apache 2 with what appears to be no clean way to install 1.3 has given me enough reason to downgrade back to 7.3...
But I'd be interested in wether someone knows anything about the wierd man characters.
I too have tried setting my term, tried using different term types on my CRT application, but to no avail. I'm thinking it's a termcap problem, but I'm not sufficiently versed in recompiling terms to know exactly what.