Chrome 58 rolled out yesterday fix the issue
Except the fix seems to be simply to show the punycode URL. That's not a fix, that's a workaround. EDIT: This led me to read up on how various browsers handle non-ASCII letters which in turn helped me discover that apparently no browser supports the German sharp-s ("ß") which gets auto-expanded to "ss" although domains containing the sharp-s can be registered separately from "ss" domains -- effectively allowing peopl…
It was West-centric, yes, but it allowed for a unique and legible ASCII identifiers. And encouraged non-ASCII languages to create a unique (or, mostly-unique) Latin representation of their scripts — which is, in general, a good thing. It encouraged unification, using ASCII as the common ground.
Allowing for Unicode characters opened a new Pandora box, creating a situation that is unsolvable — either we keep the new names, making almost every string of characters potentially ambiguous, or we return to the state where ASCII-only names are the only ones usable.
Also, differentiating between ASCII and non-ASCII names doesn't solve the thing. Imagine what if the legitimate address is already in a non-ASCII script.