I just post here a question that came up during the German translation including the answer from Regenstrief:
Question: In German we have several special characters (ÄÖÜäöüß). Is it ok to use these special characters for translation or is it better to use conversions (Ae,Oe,Ue,ae,oe,ue,ss)? How do other translations (such as Spanish) deal with it?
Answer: Yes, it is ok to use these special characters. The database supports these characters in unicode, so no worries.