I don't see why you are so dismissive of Unicode handling as it relates to programming language design. To deal with string encoding correctly, your programming language needs to transparently deal with different types of strings, or a single string that has two ways to iterate over it. That's an interesting design problem.

In particular, you do not want everything in Arc to be an object. But the typical way other programming languages deal with Unicode nicely is to have different classes that implement a common string interface. So how can Arc approach the string encoding problem without making everything an object? I don't know, but I do think it's an important question.