I hope you understand that special character handling is a pita. There have been reasons that for a long time I only supported ASCII characters in tags.
It doesn’t matter how a link (href) looks like, as long as the display text inside is correct. Google Crawlers don’t execute or follow links like wrong browser implementations. Therefore it’s also not affecting SEO.
For example, take the link I posted above, copy(!) it into you clipboard by text selection (not right mouse click copy link) and paste it into Safari. This browser will automatically change all special characters to their unicode representation.
In order to be able to transfers most of the different language characters into an ASCII representation, I need to use another PHP library, and this will be done in a major upgrade of Poster Stack. There are even some languages where no translation table exists.