Yes, this is a limitation of iCloud. While I developed the iCloud functionality, I actually used a support ticked and asked Apple Worldwide Developer Technical Support. Here is their answer:

Mountain Lion treats iCloud as an alternative location outside the file system, and which does not work like the file system we are all used to.  While Dropbox, local servers and flash drives are all shown as a hierarchical structure rooted to the local computer, iCloud and its contents exists in an entirely separate world distinct from the local computer's file system.  iCloud is a store-forward system, not necessarily intended for use as a file system.

So Apple does not consider iCloud to be a navigable, file system hierarchy, rather it is ubiquitous place to put user's documents, and not intended to have a deep folder hierarchy presented to the user.  So the limitation you see in NSOpenPanel is as designed.  NSOpenPanel does not offer any hooks to open up the iCloud account to navigate any further than one folder deep, nor to disable cloud access.  This is precisely why the New Folder button is absent from the save dialog and why the save dialog prevents browsing in the cloud.

Editing a view hierarchy like your website folder containing sub-folder content should be done locally on your machine, then pushed to the cloud.  If you want to in turn later modify anything in those subfolders, move it down from the cloud and edit them locally.
Using your own file system browser to navigate your iCloud account is not a good idea, as you said would confuse your users.

So much to do, so little time :)

It's certainly a feature I'd like to see as well, once the big features like for example regular expression search and multi file search are implemented.

The encoding names actually come from the operating system.

I'm using the Core Foundation function CFStringGetNameOfEncoding:

https://developer.apple.com/library/mac/documentation/CoreFoundation/Reference/CFStringRef/Reference/reference.html#//apple_ref/doc/uid/20001211-CH201-F11146

TextWrangler has the same names for example.

Even Apple's TextEdit uses those encoding names in its preferences.

Can you send me the file from the reverted commit so I can have a look at it and see why it is opened with the wrong encoding?

Did you try to use "Reopen with Encoding" from the File menu to open it as UTF-8?

Here's a copy of my email response:

I plan to add regular expression search as well as "Find in Files" in a future update.

Thanks for your detailed description of how you'd like to see multi document search implemented!

Actually, Sublime Text, TextMate 2 and TextWrangler all use Cmd-N instead of Cmd-T. Even Xcode uses Cmd-N to create a new file and Cmd-T to create a new workspace tab.

I'll consider adding it as an additional shortcut.

Ah, ok, I see :)

I'll look into it.

What I don't understand is this part: " (and lose my carefully configured workspace layout) "

Textastic should restore all windows, their positions, sidebar content and open tabs/files when it is restarted.

Thanks for your suggestions. I'll think about it.

Well, the alert has three buttons: Yes, No, Always - if you press "Always", the warning won't come up again and it will be disabled in settings.