I agree that it deals with what your target is.
Taiwan.tw & å°æ¹¾.tw would most likely cater to those residing in Taiwan.
Until IDN domains are normally used in the country Taiwan may have more use currently.
å°æ¹¾.com & Taiwan.com could be used worldwide, the ASCII version can be used by many people in countries that use Latin letters. å°æ¹¾.com would be good for almost any Asian language. It can be used in China, Japan, Singapore, Taiwan, Hong Kong, & Asians residing in countries like the US, England etc.
Then you might have domains like å°æ¹¾.jp (I own this), this would cater to Japanese who would want to travel to Taiwan. I could see Japanese using the jp extension because it's common in Japan but wouldn't expect it to have a need outside of Taiwan embassy or Taiwan related travel services.
With the Taiwan.tw or å°æ¹¾.tw if you don't own it, it might be hard to get. In the case of Japan any city name, prefecture, or the country of Japan itself in jp is reserved for the government. This does not apply to any location outside of Japan.
I would assume that most countries did the same but could be wrong.
I'd also look at
http://tw.yahoo.com/
to see how common the extension is in use within the country.
