Switching to utf16 is often not the way to go. Using utf8 is often a better choice for many reasons. It is a representation that may consume a bit more memory in case of some eastern languages but utf8 is usually much more desirable if we consider porting to other platforms (like unix) and integration with legacy code that uses normal char pointers (like your original code). If you use utf8 then your original code will work like a charm. Often original ascii parsers and text processors work with utf8 data without any problems.
Instead of porting all of your text processing logic just make the decision that all of your code works with utf8 and create importers (foreign encoding to utf8 converters) and exporters (utf8 to foreign encoding converters) for all other encodings. In your case this means an utf16 to utf8 converter for loading and an utf8 to utf16 converter for saving. The better would be to get the file right in utf8 format, then you don't have to convert. Note that utf files *MAY* start with a BOM
] but this isn't necessary, some smart text editors (like Notepad++) can often detect the encoding even without a BOM but handling (detecting/checking and then skipping) the bom in your loader code may be necessary if you read the file in binary mode.