The beta of Internet Explorer 7 handles internationalized domain names in an interesting method to mitigate what is known as homographic spoofing.
When attempting to read a web address with non-standard characters, it blocks the action and puts
up a dialogue box asking whether the user would like to specifically add the language
(actually the corresponding script) as valid.
The same dialogue box allows the user to specify a locale specific suffix that will be entered with a key combination.