I had been reading an earlier version of the draft
(http://www.w3.org/International/iri-edit/draft-duerst-iri-03.txt) that
included this text when I proposed byte-wise comparison
In some scenarios a definite answer to the question of IRI
equivalence is needed that is independent of the scheme used and
always can be calculated quickly and without accessing a network. An
example of such a case might be XML Namespaces ([XMLNamespace]). In
such cases, two IRIs SHOULD be defined as equivalent if and only if
they are character-by-character equivalent. This is the same as
being byte-by-byte equivalent if the character encoding for both IRIs
is the same. As an example,
http://example.org/~user, http://example.org/%7euser, and
http://example.org/%7Euser would not be equivalent under this
definition. In such a case, the comparison function MUST NOT map the
IRIs to URIs, because such a mapping would create something different
under this equivalence relationship.
The latest draft specifies a "Simple String Comparison" method that
should likely be used instead. The latest draft is here:
http://www.w3.org/International/iri-edit/draft-duerst-iri-11.txt
Brad