With IDNs on the verge of becoming mainstream, there's no place for .co. While gTLDs will be aliased to many languages, ccTLDs will only be aliased to the language of their country. So, .co is stuck as ASCII or Spanish.

You don't get it: gTLDs and ccTLDs are being translated (aliased) as well. When this is done, for, say, the Japanese user, there will be no need for any ASCII, whatsoever. As for mapping to ASCII, all IDNs are mapped to punycode, which is ASCII, but it will be invisible. And mixed scripts aren't allowed, so phishing fears are overblown; it won't be any worse than it is today. IDNs should have been a part of the original DN structure, but better late than never. It's simply idiotic to have an entire website in Japanese, except for the DN.