Taking 303, 244 to be octal numerals then that would make the two-byte sequence 195,164. The Latin-1 interpretation of that sequence is "ä", but in UTF-8 it does indeed code for a "Latin Small Letter A with Diaresis". So replace occurrences of "[i]nnn[/i]" with chr(octdec(nnn)) .
Whoever put that XML together either wasn't able to control the content or didn't know how to escape characters. Since the character set is UTF-8, then the two bytes 195, 164 could have been written directly (since they were already UTF-8 encoded) or, if they wanted to escape it anyway, used the proper XML numeric entity and written ä.