English is supposed to be the universal language for the internet, what this will do is make things a lot harder for everyone. We'll see brand dilution, since instead of simply registering google.ru, google will need to also own гугл.com/.ru/.net./org/.biz etc etc
If you search for it, you can see few more domains with greek letters: http://www.google.com/search?client=safari&rls=en-us&...
How can you distinguish between Latin o and Cyrillic o?
I'm pretty sure most popular browsers already account for this vulnerability. At the very least, Mozilla-forked browsers should still have a built-in defense against homograph attacks. [https://bugzilla.mozilla.org/show_bug.cgi?id=279099#c135]
In China for instance, numeric URLs are becoming prominent where English ones are too unfamiliar for many uses. That's a pretty poor state of affairs.
One of the major reasons I switched to a Mac was because font rendering was a lot clearer for East Asian languages.
Almost no one types an URL. They type search terms and follow links. And needless to say, if you can't type the URL in its native language, you're unlikely to be able to read the page anyway.
And if you really need to be able to see a normalized ASCII representation, it's still there. Non-ASCII DNS names are actually stored in "punycode", a semi-readable 7 bit printable encoding: