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@a.badger: The behaviour (drop non encodable strings) is not really a 
problem if you configure correctly your program and computer. Eg. you 
spoke about CGI-WSGI: if your website also speak UTF-8, you will be 
able to read all environment variables. So this issue is not 
important, it only appears when your website/OS is not well 
configured. I mean the problem is not in Python but outside Python. 
The PATH variable contains directory names, if you have only names 
encodable in your filesystem encoding (UTF-8 most of the time), you 
will be able to use the PATH variable. If a directory has an non 
decodable name, rename the directory but don't try to fix Python!