The Macintosh Latin character set contains all the characters of ISO 8859-1, Latin Alphabet 1, which includes the aforementioned characters for Icelandic (æ is also used in Norwegian and Danish, etc), as well as all the other special and/or accented characters used in modern West European languages.
Macintosh Latin is a monospace sans serif font available in sizes up to 36 points, in which Roman, italic, and bold typefaces all occupy the same cell size. It uses the Apple Quickdraw encoding, and so should also be usable with your other Macintosh applications. It is not, however, very useful with Mac Kermit itself since the code points differ from its internal VT320 font. Our plan was to replace the current internal font and coding with Macintosh Latin, but the plan was never realized due to lack of Macintosh programmers who could work on the Kermit Project. However, the built-in Mac Kermit font is suitable as-is for Icelandic and Old and Middle English, since it too includes Thorn, Eth, and Ash.
Macintosh Latin does not include Yogh, Wynn, or Tironian sign, but neither does Latin-1 nor any other known 8-bit character set, nor does HTML have tags for them. Yogh is generally represented by "3" (as in the rendering of Sir Gawain and the Green Knight found at the University of Virginia), Wynn by "w", and Tironian sign by Ampersand.
PCs, of course, can use MS-DOS Kermit, Kermit 95, or Kermit/2 to access Latin-1 text including Old and Middle English, in a completely straightforward way, assuming the PC has Code Page 850 loaded. For an article on using Kermit software to "surf the Web" in a multilingual fashion, see Circumnavigating the Web with MS-DOS Kermit in Kermit News #6.
For more information about using Old and Middle English in terminal emulation and on the Web, see:
Cathy Ball's Old English Pages at Georgetown University.
For more information about viewing Latin Alphabet 1 through a Macintosh Web browser, see Alan Flavell's article ISO-8859-1 and the Mac Platform at the University of Glasgow, Scotland, the upshot being that the encoding used in Maclatin differs in eight positions from that assumed by various other "Latin-1-enabled" Macintosh software packages. One solution to this problem would be to rearrange those eight characters in Maclatin and issue a new Maclatin II. Volunteers?