For some reason (Have dmoz changed the coding?) it seems to work with IE now.

If You still want a bugfix,
a quick and dirty one would look something like this:

# n-tilde
@tags = split(/\"/, $pod_line); # assign podline to test
@orglink = @tags;
$countntilde = 0;
$startlink = 0;
foreach $ntilde (@tags)
{
if ($startlink)
{
$ntilde =~ s/ñ/\%f1/g; # change link
$pod_line =~ s/$orglink[$countntilde]/$ntilde/; # replace original with changed
}
if ($ntilde =~ m/a href/i)
{
$startlink = 1;
}
else
{
$startlink = 0;
}
$countntilde++;
}

Place it in the part of the script where $pod_line is modified.
It should be simple to modify the above for any international characters