Emails contain html entities from the site name

The site name ('blogname' option) is escaped with esc_html(), so any plain text usage of 'blogname' needs to be unescaped:

$blogname = wp_specialchars_decode(get_option('blogname'), ENT_QUOTES);

The site name is used as plain text in the email subject, body, and from name of the new question and new answer emails.

For example, if the site name is "Joe's Blog", then the email will look something like:

From: Joe& #039;s Blog <admin@joes-blog.com>
Subject: [Joe& #039;s Blog] New Question

Dear admin,

        New question was posted on Joe& #039;s Blog.

        [question text]

        If you wish to answer it please goto http://joes-blog.com/wp-admin/post.php?post=197&action=edit.

        Thanks,
        Joe& #039;s Blog

There's no hooks available for these, so I had to fix by modifying the core plugin files.

[Edit: needed to add a space after the ampersand in my example for it to show the plain text properly.]