After the recent discussions on python-dev I went through the Unicode howto and fixed a few things, then I found this issue so I'm attaching the patch here.
The patch addresses mostly markup issues, but it also removes the usage of 'byte string'.
A few more things that should be done:
  * clarify some more terms (e.g. codepoints, code units, characters, possibly scalar values etc.);
  * mention the differences between narrow and wide builds, including:
    - a discussion about the UCS-2/UTF-16 implementation of narrow builds;
    - something about surrogates and surrogate pairs;
    - effects of slicing and indexing on narrow builds;
    - functions/methods that (don't) accept non-BMP chars on narrow builds;
  * something about Unicode supports in the re module (this probably can wait after the 'regex' inclusion).

Also the codecs doc has a section about Unicode and encodings that might be moved to the howto.