I have a similar problem (related to this same error).
I have a simple LaTeX project and I configured a build system to invoke pdflatex / latexmk which is working fine, everything compiles; however when the log file generated by the process contains non-ASCII characters I get the error "[Decode error - output not utf-8][Finished]". This is because, the encoding of the output file changes from ASCII to latin1.
I'm aware that Sublime cannot be made responsible for other programs output, but I could not configure pdflatex / latexmk to change its output encoding... so I'm here.
Is there a solution to this? (Specifying "encoding": "[cp1252|latin1|latin2|...]" in the build system definition does not help.)
Thanks in advance!
PS.: Is Sublime blog the right place to subscribe for receiving updates on new builds, RC's and stuff?