It is possible to use hex values in "sed".
echo "Ã" | hexdump -C
00000000 c3 83 0a |...|
00000003
Ok, that character is two byte combination "c3 83". Let's replace it with single byte "A":
echo "Ã" |sed 's/\xc3\x83/A/g'
A
Explanation: \x indicates for "sed" that a hex code follows.