Registration of Cyrillic domains in the SU zone

I quote a letter that just came to me from one of the registrars:

From April 28, 2008, in accordance with the decision of the Supervisory Board
Foundation for Internet Development, changes in the regulatory framework come into force
the document “Regulation on the registration of domain names in the SU domain”, namely:

removed restrictions on the registration of domains with the prefix xn-- that
will allow you to start registration of multilingual domains in this zone (type "name.su").
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The cost of registering multilingual domains will match your
the current cost of registering domains SU.

Only domain names with the prefix "XN--" are subject to registration,
which, when converted using the PUNYCODE algorithm, have
domain name representation consisting of letters only
to one of the used UNICODE tables
and / or the numbers "0", "1", "2", "3", "4", "5", "6", "7", "8", "9" and / or signs "-" (hyphen).

If I understand correctly, this is bad. Bad after all?