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Per April 2012, then Firefox and IE8 returns UTF-8 string, whereas Safari/Chrome (Webkit) and Opera returns ASCII (punicode). There seems to be some evidence that things break - for authors - when UA returns UTF-8, see https://bugzilla.mozilla.org/show_bug.cgi?id=743488 But I am not against the Firefox/IE8 behavior. (Have per now not tested IE9 and IE10.)
The plan is ASCII. With some kind of API for code points. Opera does Unicode too by the way, but only sometimes (e.g. for http://æ/). Probably only when IDNA2008 considers it safe for display, which is one hairy algorithm.
*** This bug has been marked as a duplicate of bug 18910 ***