Python\'s urllib.quote and urllib.unquote do not handle Unicode correctly in Python 2.6.5. This is what happens:
In [5]: print urll
Python's urllib.quote and urllib.unquote do not handle Unicode correctly
urllib does not handle Unicode at all. URLs don't contain non-ASCII characters, by definition. When you're dealing with urllib you should use only byte strings. If you want those to represent Unicode characters you will have to encode and decode them manually.
IRIs can contain non-ASCII characters, encoding them as UTF-8 sequences, but Python doesn't, at this point, have an irilib.
Encoding the value to UTF8 also does not work:
In [6]: print urllib.unquote(urllib.quote(u'Cataño'.encode('utf8')))
Cataño
Ah, well now you're typing Unicode into a console, and doing print-Unicode to the console. This is generally unreliable, especially in Windows and in your case with the IPython console.
Type it out the long way with backslash sequences and you can more easily see that the urllib bit does actually work:
>>> u'Cata\u00F1o'.encode('utf-8')
'Cata\xC3\xB1o'
>>> urllib.quote(_)
'Cata%C3%B1o'
>>> urllib.unquote(_)
'Cata\xC3\xB1o'
>>> _.decode('utf-8')
u'Cata\xF1o'