For anyone else reading this, I changed to UTF-8 tonight to cure coualt not starting automatically. For some reason this completely borked by hotas throttle and stick whereby any aircraft didn't react to my inputs. I've just restored the original exe.xml and my hardware is working again.
As explained in the first post of this thread, the issue of add-ons not being started automatically by the EXE.XML, is not really related to an issue related to the EXE.XML encoding.
Sure, if you have a problem with it, it's guaranteed it will not work but, if you read the explanation in the first post carefully, there's another fundamental issue with starting add-ons, that has been confirmed to be a problem in the sim, as indicated in the reply I cited, coming directly from Asobo, and it's caused by simulator trying for some reason to validate the add-ons licenses, something it clearly can't do, not possibly knowing anything about any license requirements of 3rd party add-ons.
MAYBE this could be some kind of derivative bug that, if MSFS has a problem with *its* license, is not supposed to start any add-ons, which seems to be confirmed by the fact that, when the .EXE.XML doesn't seem to start anything, even enabling the Simconnect logging Console results in an unspecified license error.
That is to say than yes, before you have any chance to have the EXE.XML add-ons starting correctly, the EXE.XML must be correct and have the proper encoding, meaning the actual content of the file must match the encoding declaration and, by default, even when an XML declaration is missing, the XML standard dictates the file is assumed to be UTF-8 without BOM, but even if your XML is perfectly fine, there's the OTHER issue explained above.
This SEEMS to have been fixed in SU11 Beta. I'm just starting MSFS again right now while I'm typing this (using the latest SU11 Beta), and my EXE.XML, which has an UTF-8 declaration and NO BOM, started the only two add-ons I have correctly, that is couatl64_MSFS.exe and FenixBootstrapper.exe. To be sure, I tried 3 times in a row, and in all 3 startups, couatl64_MSFS.exe and FenixBootstrapper.exe were correctly shutdown after quitting MSFS, and they were both auto-launched on the following startup so, it seems this might be fixed.
Assuming, of course, the EXE.XML is otherwise correct and doesn't include any errors.