ICANN Approves Internationalized Chinese Domain Names
philalethiac writes "Millions of Chinese language users will soon be able to access the Internet using Chinese script following a decision today by ICANN's Board of Directors to approve a set of Chinese language internationalized domain names."
There are some attempts to mitigate the problem, though you're right that it can be one. Some registrars are limiting the characters that can appear in their domain, and there's a push to make that more widespread. One approach is to limit to "local" scripts only, so e.g. Cyrillic or Latin in .ru, but no Telegu or CJK in .ru. That greatly limits the number of clashing pairs compared to allowing all of Unicode. Some registers also have policies on not permitting certain known clashes, such as allowing two domains to be registered that are identical, except for one having a Latin 'a' where the other has a Cyrillic 'a' (which look identical in most fonts).
Firefox and Opera will only display the internationalized Unicode name for TLDs that are whitelisted as having a "safe" policy on the subject, and will display the punycode for other domains. Here is Mozilla's current policy.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10