Here's the error:
# /usr/local/sbin/syslog-ng -v -s -f /etc/syslog-ng/syslog-ng.conf Error parsing command line arguments: Conversion from character set '646' to 'UTF-8' is not supported
This has nothing to do with your config file per se. I had this issue myself and it took a while to figure out where the problem was.
What is needed is a charset.alias file; in my case I put it in /usr/local/lib/charset.alias. I put in a generic one I simply plucked off the web for Solaris 10 since that was enough to make syslog-ng run properly, but you could probably just generate one using the config.charset script if you have that.
I had the same problem with Solaris 10 Sparc ... I just add the following link : ln -s /usr/lib/charset.alias /usr/local/lib/charset.alias