I'm still looking into this issue. It seems that it is complaining about the charset value itself, but this should be valid. As a test of this you should try to add in a cStr around the value to ensure that it is set to a string like this:
set WA_MailObject = WAUE_SetCharset(WA_MailObject, cStr("ISO-8859-1"))
If the problem is still present after making this update please post back with a copy of the WA_Universal_Email folder from the site root in a zip archive. I will use the files to do some direct side by side comparing.