Pathauto with swedish letters åäö (i18n)
In the settings of pathauto (admin/build/path/pathauto), mark "Transliterate prior to creating alias".
In the folder of Pathauto ther is a file named i18n-ascii.example.txt. Rename it to i18n-ascii.txt and open it and add the translation of the swedish letters. You can download it from here if you want to.
In computing internationalization often is abbreviated to the numeronyms i18n (where 18 stands for the number of letters between the first i and last n in internationalization, a practice that was created at DEC in the 1970s and L10n respectively, due to the length of the words. The capital L in L10n helps to distinguish it from the lowercase i in i18n.
EDIT: Drupal 7
Install Transliteration http://drupal.org/project/transliteration go to settings /admin/config/search/path/settings mark "Transliterate prior to creating alias" it will translate "åäö" into "aao"