It seems that others also believe there are problems with IDNs. One concern is that allowing the use of different "names" -- that is, names that are meaningful to humans and not just identifiers -- requires identifying the language. Otherwise, how would a reader application, as used by a blind person, be able to read the name?
This internet draft is also worth reading: What's in a Name: False Assumptions about DNS Names. Here's an excerpt:
Posted by Doug Sauder at January 9, 2005 10:41 AM... there has been a strong demand to acquire domain names that have significance to people through equivalence to registered trademarks, company names, types of services, and so on. Such identifiers serve many business purposes, including extension of brand, advertising, and so on.
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The essence of the problem is that humans will frequently make assumptions about a name based on their expectations and understanding of what the name implies. When these assumptions are wrong, the user might be surprised, but the system works, and the human can do something different having realized that its assumption was false. When an automaton makes similar assumptions, the system might fail, and it might fail systematically.