Another thing we looked at was the extended character changes for German, French, and Danish characters. To fullu support internationalized URLs I think we need to support the unicode characters and URLencode them, so that is another area to look into.
So two questions: is preserve-case a generally useful feature to add to util_text_to_url
and: should be look further into supporting URLs with unicode characters in them? This probably requires a toolkit-wide way to make sure that urls inside A tags are urlencoded correctly and only once.