Speaking of Unicode identifiers being a stupid idea: I have not seen a single Unicode/punycode URL in my almost 10 years in Japan, in real life.
Not. Once. Not in the hostname portion, not in the path portion. Never.
Nobody wants that nonsense here. Seriously. It's a silly novelty and only creates practical problems (and security issues).
You know how Japanese ads and billboards direct people to complex pages/URLs? They give you a search term to plug into Google.
(To clarify, you do get Unicode terms in path fields for things like wikis, but never as part of URLs people are expected to type out, and I've seriously never seen punycode domains.)
@marcan In Argentina, .com.ar domains started allowing áéíóúüñ in domain names, and gave registration priority to people who already had the un-accented version registered.
I don't think I have *ever* seen any legitimate domain name using them. People will just assume "links don't have accents" and type it without so you'd need to register both anyway.