Bas: The general problem of typing characters that aren't on your keyboard has had some sort of solution using IMEs for, I dunno, yonks.

Aleph0: I'm not sure that your "中国" test is so conclusive. I was under the impression that China *had* gone ahead and used their own script within their own domain. Is it possible that search engines on *.cn are smart enough to filter their results for IP addresses outside the Great Firewall? (That might have been a technical requirement.)

On the other hand, you have a fair point about "the last two letters of a URL". Unless *.cn and *.中国 (or whatever) resolve to the same namespace, this looks like just another round of DNS land/grab followed by more scope for phishing.