Hi Wendy,
Thanks for the response and the effort you're putting into solving this problem. I am including the shapefile and a layer file with this comment as files. The feature layer in question is a geology layer that is available to the public here.
A couple of things I didn't mention about the issue that's probably relevant. The layer file (also attached) contains the symbology that must be applied to the geology feature class, based on the column of "Legend Text". The labeling of features, as per FGDC standards, has to be done using the custom font "FGDC GeoAge" and applied to field "UNIT_LAB_1". This creates special characters that are used in geology to indicate time, age and rock units. For example, ":3gr" becomes 
The issue outlined in this thread presents itself only when I apply the layer file. Before importing the layer file's symbology, I am able to correctly label features using the FGDC GeoAge font on the specified field. All other fonts function as they should, as well. However, once I apply the .lyrx file, none of the fonts function or look as they should. My original post's screenshot is taken at this moment. Curiously enough, it's only the FGDC fonts that appear with familiar characters (although still wrong), while the others all contain the same weird characters.
Hope that makes sense.
Thanks!
Kevin