Reopened. This was not caused by the character encoding issue. Instead:
Since 4.0.4, VaultWiki is designed to allow users to avoid BB-Code name collisions by letting them rename the wiki BB-Codes. Likewise, if VaultWiki encounters a BB-Code name collision during installation, it will automatically rename the wiki BB-Code (it won't pick a great name, but it will avoid the collision).
This becomes a problem when installing side-by-side with VaultWiki 3, which has almost all of exactly the same BB-Code names. Almost every BB-Code name collides and gets renamed. The result is that none of the wiki BB-Codes parse via the old names.
However, we have multiple problems here. Since the VaultWiki 4 BB-Code was renamed, the importer knew this and was designed to update all the uses to the new name during import. This did not happen.
Further, VaultWiki 4 should ignore collisions with BB-Code names if it also detects VaultWiki 3 is installed. In this case, it should treat the BB-Codes like the 4.0.4 upgrade script does.
The BB-Code replacement text in VaultWiki 3 (which is never used unless VaultWiki 3 is disabled) was incorrect because it swapped the terms {param} and {option}, leading the result you posted about.
I've confirmed this as a bug, since there are 2 problems with VaultWiki 4's handling of these BB-Codes that need to be addressed.