have you taken a look at tikz-qtree? It makes tree building slightly easier and allows e.g. lines between nodes. The tikz-qtree manual on page 6 shows something remotely similar to what you want to do.
You can change the encoding of your m-file.
Open it in an editor (e.g. Notepad++) and then save the file anew, with a different encoding. ANSI should work.
Potential warning: I don't know, how Matlab will react, when it tries to use that m-file and it is not utf8 encoded