The issue is really that Terry had removed 2.7 from the list of affected versions, and added 3.4 instead. The original issue was reported against 2.7, where the observation that it uses CreateProcess is correct:

http://hg.python.org/cpython/file/babb9479b79f/PC/_subprocess.c#l463

The OP's observation that this restricts the supported executable names to be ascii is incorrect. Instead, any string in the CP_ACP ("ANSI") encoding of the system would work, which practically allows to access all directories on a typical installation.

I'd close this as "won't fix", except that I recall a recent discussion that lack of Unicode support in some API is considered a bug in 2.7.

So: patches welcome (not really - I wouldn't mind if this stays open until 2.7 is properly retired).