Some stuff to check before fixing it:
Also check if werkzeug has support for filename*=...
Maybe fixed by 1e9ec607913d
Please help testing with different browsers and give feedback here (post browser, version, OS and test result for downloading of non-ascii named item).
Safari might have problems as it doesn't implement rfc2231 yet. Other modern browsers should support rfc2231.
Older browsers might fall back to using the last url component and maybe can decode it correctly, so even they might work.
firefox 5.0, ubuntu, works (downloaded äöü.txt correctly)
chromium 12.0.742.112 (90304), Ubuntu 11.04, works (downloaded äöü.txt correctly)
tested whether it downloads item äöü.txt correctly:
firefox 5.0, windows, works
chrome 12.0.742.122, windows, works
opera 11.5, windows, works
IE 9.0.8112.16421 (Update versions: 9.0.1), windows, works
safari 5.0.5, windows, works
safari 5.1, windows, works