The reasonable thing would be to display the real domain, and the punycode one, in the same bar. Then you can at least detect some homograph attacks. Or possible use a monospace font for the URL bar. So that 0 with a dash and O are actually visible at first glance.
Please distinguish between fonts-for-data and monospace-fonts.
E.g. http://input.fontbureau.com/info/#writing has a sample of a not-actually-monospace font with IMHO awesome legibility in the mentioned "matter-of-fact" category of typefaces.
0 with a dash and O without are not at all bound to monospaced fonts.
FYI, I left console editors due to their inability to handle my preferred Input Sans Narrow Light 14pt (16pt on my 110 dpi screen), just so you can understand the pain of monospace.
