Handle foreign character web input

[Tobiah]

A guy comes in and enters his last name as RÖnngren.

So what did the browser really give me; is it encoded
in some way, like latin-1?  Does it depend on whether
the name was cut and pasted from a Word doc. etc?
Should I handle these internally as unicode?  Right
now my database tables are latin-1 and things seem
to usually work, but not always.

Also, what do people do when searching for a record.
Is there some way to get 'Ronngren' to match the other
possible foreign spellings?