You mean that there are other languages with other alphabets? And some of those look like ours? The horror!
Homographs, or letters which look alike but aren’t, are the current fascination of phishing exploits. This is a relatively old problem, documented in 2002, of which the IETF was aware.
So, should UNICODE be squeezed into ASCII so that it can be used in hostnames? Which UNICODE? My position on internationalized domain names may be unwelcome: You don’t use an ASCII subset? Tough shit.
I can no more type Hyundai in hangul, than Kim Jong-Il can type Hyundai in Latin. The keyboards don’t permit it.
One of the reasons for the ASCII subset was to be able to transfer the object identifier from the computer to paper and back via my fingers and a pen, or from this computer to that computer without having recourse to copy and paste. It’s certainly much easier to do that with DNS names than, say, X.208’s Object Identifiers. I will admit that the non-Latin world has had to adjust to our alphabet, much as I have had to adjust to Arabic numerals. That’s what happens when you trade: you pick a common language and use it.
Though, now that they’ve stopped teaching writing in the schools, we’ll soon be illiterate, so it won’t much matter.
(On the other hand, I think it’s funny how all these problems come from trying to approximate analog forms within the digital namespace.)