Well - I reckon you got 2 possible options.
I haven't got round to trying each of these yet, but I have done quite a lot of work around encoding and decoding mime mails so have faith! 🙂
Ya first option is to quote the name i.e.
"Joe Smith, Jr." <joe@smith.com>
This should definetly work since I believe it is in the mail headers rfc doc.
Your second option is to encode the name using quoted printable encoding. PHP has some functions for this but I think you need the IMAP extensions in order to get to the function. This seems to be the route that companies like Yahoo take.
Anyhow - the simplest option is the first one and should solve all your problems 🙂