Yeah, this would only get you bare-minimum track titles on the screen and wouldn't help you when selecting playlists, etc.
However, taking the idea a step further, if you wanted to title your playlists with unicode, you could have a userland app for selecting playlists. It could use the Hijack serial-insert protocol to tell the player to start playing that FID.
Hmm, maybe it COULD work.... Searches would still be a pain, but if you could select playlists and see track titles, it might be enough...