ö doesn't need Unicode. It's ISO-Latin-1 (ISO-8859-1). An update is ISO-8859-15. Latin-1 is an 8 bit character set including ASCII, covering the Western European languages. I don't know PHP, but it could be the default or a simple character set option.
I have a screenscraping thing in place that targets an ASCII only environment (LambdaMOO mud). Manually replacing unicode stuff like this has been a pain in the butt. Luckily that was all just for fun and didn't need to be perfect.
Is there a good library out there (in any language) that does good unicode --> ASCII substitutions for major languages?