When John Smithers edited this postthis post, I noticed that it works if you escape the unicode character. So http://linus.unnebäck.se actually works. The markdown source for this is http://linus.unnebäck.se
. It's still just a workaround, but better than those xn--bla-xyz
things.
Since SO takes a whitelisting approach to characters in links, I suspect there won't be a change anytime soon; especially since Jeff is notorious for talking about "crazy moon language" for umlauts et al. But I agree it would be nice.
Epilogue: Seven weeks after I wrote this, Jeff hired me – and it only took me a little over five years to make good on the "it would be nice" thing. And umlauts and ASCII characters lived together in harmony and happily ever afterhappily ever after.