Acroplex I can't tell you about every market but I can firmly talk about Japan & Japanese.
As far as IDN drops there has been IDN drops since forever. It's only recently they have been in SnapNames.
Just as you say there needs to be people who are reliable in the target market, realize that there are bilingual, trilingual individuals that post here & other forums.
ASCII dot com is not the cheapest at most registries in Japan. Currently because IE7 is coming out the Japan Registry is doing major campaigns with domain registry sites putting IDN.jp at less than $10, & these are the domain registry sites many Japanese use.
Yahoo Japan, Google Japan, Goo are all IDN friendly & Yahoo & Goo have had press releases to announce when they went IDN friendly.
Even though all of this info doesn't get published in English, it does in Japanese. It's just natural progression that's happening. Is it going to flood our domains with traffic overnite? No.
IE was the biggest thing holding back the use of IDNs. Use of other browsers in Japanese is relatively low. I have ASCII based Japanese sites & IE use is about 95% to 97%.
As far as some people having bad domains, well. Like someone wrote above, it happens in English all the time. Anyone who plans to invests that is not familiar with the language I strongly suggest to stick to generic commercial terms initially.
Most have accepted it's become another part of domaining. Instead of trying to down it, look at the facts we present, the biggest is that companies are working hard towards IDN compatibility. And with the facts, it has to be facts that pertain to the markets that IDNs will be used.