Just 13% of the world speaks english. It is not a reference for how we do or should write on the web.
It would maybe make sense to restrict url display to the computers language setting.
It does make sense to permanently disable Punycode.
Unless you're proposing we let it live in case someone somewhere ever uses it. Then, sure.
Of course that registry actually has a sane punycode policy, so such impersonations are impossible there, whereas they're happening all the time in .com. Maybe time to re-evaluate your idea of "reality" versus "theory".