byte[] dataToDecrypt = ByteConverter.GetBytes("This is the string I want to encrypt. But it seems like it has to be long enough for this effect to happen.");

byte[] encryptedData = RSA.Encrypt(dataToEncrypt, true);

byte[] encryptedData2 = ByteConverter.GetBytes(ByteConverter.GetString(encryptedData));

Console.WriteLine("encryptedData.Length: " + encryptedData.Length);

Console.WriteLine("encryptedData2.Length: " + encryptedData2.Length);

First of All I like to mention that RSA has a limitation that it cannot Encrypt/Decrypt data which size is more than 117 byte.  Check http://www.codeproject.com/useritems/SecureDataExchange.asp

Having that in your mind here is a simple example of RSA Encrypt/Decrypt:

string Encrypt(string publicKey, string plainString)
{
 byte[] plainByte = System.Text.Encoding.Default.GetBytes(plainString); // Converting it to byte array

 using(RSACryptoServiceProvider rsa = CreateRSA(publicKey))
 {
  byte[] cipherByte = rsa.Encrypt(plainByte, false); //passing false to support Windows 2000.
  string cipherString = Convert.ToBase64String(cipherByte); // Converting to string

  return cipherString;
 }
}

string Encrypt(string privateKey, string cipherString)
{
 byte[] cipherByte = Convert.FromBase64String(cipherString); // Converting it to byte array

 using(RSACryptoServiceProvider rsa = CreateRSA(privateKey))
 {
  byte[] plainByte = rsa.Decrypt(cipherByte, false); //passing false to support Windows 2000.
  string plainString = System.Text.Encoding.Default.GetString(plainByte); // Converting to string

  return plainString;
 }
}

RSACryptoServiceProvider CreateRSA(string key)
{
 CspParameters parms = new CspParameters();

 parms.Flags = CspProviderFlags.UseMachineKeyStore;

 RSACryptoServiceProvider csp = new RSACryptoServiceProvider(parms);

 csp.FromXmlString(key);

 return csp;
}

The whole point of my question is that the code snippet I gave works to encrypt and then decrypt the original String, if I decrypt encryptedData at the end and not encryptedData2. This is not a problem with understanding how RSA works or how Microsoft's implementation of RSA works. This is a problem with understanding why the UnicodeEncoding object seems to be altering data when it converts between byte[] and String and back. I see that you use Convert.FromBase64String instead of the UnicodeEncoding object. Since every byte in my byte[] array is <= 255, would this work while the UnicodeEncoding object doesn't?