I found the cause
It had to do with a mod I installed for using the ckeditor in my text areas earlier
Found (here)
This modified code in viewticket.inc.php was was causing the problem.
<?php
$doc = new DOMDocument();
$doc->loadHTML(($resp_row));
echo $doc->saveHTML();
?>
When I changed it back to the original
<?=Format:($resp_row)?>
It displayed the cyrillic properly in the ticket view.
Since my company has Russian support personal for Russian clients the cyrillic is more important; I would like to have both working though.
Like I said in the original post, it sends the email out properly and the database is storing it right it just gets screwed up in the ticket view.
Anybody have any ideas on how I can get it to display properly in the ticket view? Or should I just take out the ckeditor?