Visit this link:
http://www.alistapart.com/articles/accent-folding-for-auto-complete/
Carlos Bueno highlights an oft overlooked aspect of internationalization. His address book auto-complete example at the beginning of the article crystalized the problem for me immediately. The solution he discusses for a fuzzy character match dubbed accent folding seems logical, especially in certain contexts. Beyond those contexts, the problem of transliteration gets complicated quickly.