3) If you do insist on using latin-1 for whatever project you are working on, be sure to switch to ISO-8859-1 in Preferences → Advanced → Saving. By default it is utf-8, and I think that is why it switches to utf-8 when you paste æøå from Word. If you set it to ISO-8859-1, then it should pick latin-1 instead.
Finally a question: If your web-site is all in latin-1, how do you deal with user input, if any? I.e. if I can post comments or in some other way submit arbitrary plain text to your site, you just pray I restrain myself to latin-1, and that the browser sends my text as latin-1? ;)