Google Webmaster Tools now supports Internationalizing Domain Names in Applications (IDNA)
http://googlewebmastercentral.blogspot.com/2007/08/written-by-trevor-foucher-webmaster.html
IDNA provides a way for site owners to have domains that go beyond the
domain name system's limitations of English letters and numbers. Prior
to IDNA, Internet host names could only be in the 26 letters of the
English alphabet, the numbers 0-9, and the hyphen character. With IDNA
support, you'll now be able to add your sites that use other character
sets, and organize them easily on your Webmaster Tools Dashboard.
IDNA uses Punycode
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