Came across this via Security.nl
This page presents an example of The Homograph Attack described by Evgeniy Gabrilovich and Alex Gontmakher. (See "The Homograph Attack", Communications of the ACM, 45(2):128, February 2002. Click here for the full-length paper in PDF, or here for the HTML archive of the CACM Inside Risks column at SRI).
To prove the feasibility of this kind of attack, we legally registered (at Register.com) a homographic variant of the domain name "Microsoft.com" which incorporates Russian language characters.
Here is the forged name http://www.mi?r?s?ft.com and here is the real thing http://www.microsoft.com.
Can you tell the difference ?
Here is another example and the accompanying IDN advisory.
The most logical application of this would be in fishing attempts I suppose, and of course any web-code attack.