Emails at punycode domains do not recognize UTF8 symbols in logins

Reporting an issue with punycode domains.

If you have an email at a punycode domain, for example admin@пример.com (a), or its punycode counterpart, [email protected] (b), you won’t be able to use (a) as a login (authentication will fail). Instead, you will have to use a punycode-encoded email (b).

Should any domain name be punycoded automatically for usernames? If we enter a punycode-version in the settings UI, it does not read well for a regular user. UTF8-version is preferred from the user point of view.