It should be "utf-8", in lower case. How come it's in upper case on
your system?

Did you produce the Info files yourself, or did they come with some
package built elsewhere?

I used homebrew to build Emacs, so I believe the info files were generated locally during the build process, but I didn't do anything special in that regard.

I've been trying out two different build formulas,

1. https://github.com/d12frosted/homebrew-emacs-plus

(just GNU Emacs with some build options)

2. https://github.com/railwaycat/homebrew-emacsmacport

(GNU Emacs with some source code modifications for OSX)

Both builds have the uppercase "UTF-8" local variable in their info files, and both exhibit the behavior I described.