I have previously read Spolsky's article on character-encoding, as well as this from dive into python 3. I know php is getting Unicode at some point, but I am having trouble understanding why this is such a big deal.
If php-CLI is being used, ok it makes sense. However, in the web server world, isnt it up to the browser to take this integer and turn it into a character (based off character-encoding).
What am I not getting?
Well, for one thing you need to somehow generate the strings the browser displays :-)
There's an awesome FAQ section on Unicode and the Web here. See if it answers some of your questions.
The PHP string functions often treat strings as sequences of 8-byte characters. I've had all sorts of issues with Chinese text going through the string functions. substr(), for example, can cut a multi-byte character in half, which causes all manner of problems for XML parsers.
PHP does "support" UTF8, look at the mbstring[1] extension. Most of the problem comes from PHP developers who don't use the mb* functions when dealing with UTF8 data.
UTF8 characters are often more than one character so you need to use functions which appreciate that fact like mb_strpos[2] rather than strpos[3].
It works fine if you are getting UTF8 from the browser -> putting in database -> getting it back out -> displaying it to the user. If you are doing something more involved with UTF8 data (or indeed any major text processing) you should probably consider using an alternative language.