I'm not an expert on this, so I cannot exactly explain how it works and why it works and stuff. But since nobody gave you satisfying answer on your second question sofar, I try to contribute myself. So, I guess I have a solution if your concern is using German. If you also want to use the Greek alphabet or math symbols and stuff, then I am afraid, this cannot work without LuaTeX or something similar that supports Unicode.
This problem is solved in the Czech-Slovak distribution of TeX, which, if I understand it corretly, has its own slightly modified fonts and internally it transforms the utf8 input into iso8859-2 coding, where all the Czech, as well as German, characters appear. See https://www.ctan.org/pkg/csplain
You can write, for example
Příliš žluťoučký kůň úpěl ďábelské ódy.
„Fix, Schwyz!“, quäkt Jürgen blöd vom Paß.
\bye
And after compiling using pdfcsplain
instead of pdftex
, you get the right result.
\input luaotfload.sty \font\lmr = name:"lmroman10-regular" gr\"un \lmr grün \bye