Interesting article, I've had some similar (though significantly less severe) experiences with having ä and ß in my names, it seems many U. S. companies are just unwilling/incapable of going beyond ASCII. The government being this sloppy at getting accents right is surprising, I would expect them to value accuracy and a clean paper trail when handling names. http://archive.today/5h4v2
My understanding is that they are still phonetically entirely equivalent. How does it feel to have to substitute them into your name? (Or do you have a different recourse?)