QCCSID 65535 means that characters are used by their hex value as is and won't get translated. IMHO you should always set the QCCSID so it represents the codepage you're actually using. Why IBM changed this value's default is out of my knowlegde.
Regarding httpd.conf, here's mine (German codepage with Euro sign)
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You should also make sure, that you got the CCSID in fastcgi.conf right (most propably and by default 819).
I know that there are some pitfalls in using PHP on IBM i. As they are in using on Linux, Unix, Windows ... As they are in using C#, Java, <insert any language here> ...
But I can assure you, once you get past this problems, this concept offers great opportunities. (No, I'm not a Zend employee)
And don't hesitate to ask here.