From menu-config.xml (utf-8):

<Menu name="bannerMenu" title="Schnellzugriff">
    <Item title="banner.startseite.title" page="/" />
    <Item title="Impressum &amp; Rechtliches" page="/info/imprint"/>
    <Item title="banner.service.title" page="/info/service" />
    <Item title="Über uns" page="/" />
    <Item title="banner.alle.title" page="/" />
 </Menu>

properties file (iso-8859-1):

banner.startseite.title=Startseite & Home
 banner.service.title=Service &amp; Hilfe
 banner.alle.title=Für Euch

JSP snippet:

<menu:useMenuDisplayer name="ListMenu" bundle="menu">
        <menu:displayMenu name="bannerMenu" />
  </menu:useMenuDisplayer>

The HTML result is (fetched with wget to be sure my browser doesn't mix
it up):

<meta [...] charset=iso-8859-1" />
[...]
<li><a href="/" title="Startseite & Home">Startseite & Home</a></li>
<li><a href="/info/imprint" title="Impressum & Rechtliches">Impressum &
Rechtliches</a></li>
<li><a href="/info/service" title="Service &amp; Hilfe">Service &amp;
Hilfe</a></li>
<li><a href="/" title="<DC>ber uns"><DC>ber uns</a></li>
<li><a href="/" title="F<FC>r Euch">F<FC>r Euch</a></li>

<DC> and <FC> in the output are some Unicode Bytesequences

So we have the following cases:

1. property string with "&" results in "&"
2. XML menuconfig with "&amp;" results in "&"
3. property string with "&amp;" results in "&amp;"
4. Umlaut in XML results in wrong encoding
5. Umlaut in properties results in wrong encoding

case 1 is difficult: Should struts-menu think of properties as html
strings or just plain text. this should be documented. In my opinion the
tokens should be interpreted as plain text and be converted to valid xml
text strings on output, encoding & < > and ".

case 2 is a bug

case 3 is like case 1

case 4 and 5:
i switched xml file to iso-8859-1 (xml encoding attribute and
the file itseld) and the result was the same. it was spit out as utf-8.