Is there any readily available DNS software for multi language Domain names?

assuming they're all using the standard character set, all dns servers should work. I'm not even sure if registrars/ICANN permit domain names with nonstandard characters such as ó or ñ, etc.

Multilanguage domain names have been resolving for a while now... Where you can actually register them, I don't know.

Recommended reading:

http://cr.yp.to/djbdns/idn.html

http://pi.cr.yp.to/