I found dougan's thread and his great home page (
http://www.vcn.bc.ca/~dugan/) and combining the relevant info there plus a bit more googling resulted in the following solution:
1- make sure CONFIG_NLS_UTF8=y is defined in the kernel config
2- use append=" vt.default_utf8=1" (lilo.conf)
3- set LANG=en_US.UTF-8 in /etc/profile.d/lang.sh
4- set "iocharset=utf8" in the fstab entry for my filesystem (JFS), which makes JFS translate the filenames to/from UTF8 (ie no need to change filenames)
That was all, no need to rename files due to the nice feature of JFS, if you use a different filesystem then you must check to see if there is an equivalent option.
Now amarok2 can finally deal with all my music files and I got it to work almost like version 1.4 (what a waste of time this was!)