> This shouldn't be an issue in 3.7, at least not with the default UTF-8 mode configuration. With this mode, Py_DecodeLocale calls _Py_DecodeUTF8Ex using the surrogateescape error handler [1].

Right, enabling explicitly the Python UTF-8 Mode works around the issue:
https://docs.python.org/dev/library/os.html#python-utf-8-mode


$ python3.10 -c 'import sys; print(ascii(sys.argv))' $'\U7fffbeba'
Fatal Python error: init_interp_main: failed to update the Python config
Python runtime state: core initialized
ValueError: character U+7fffbeba is not in range [U+0000; U+10ffff]

Current thread 0x00007effa1891740 (most recent call first):
<no Python frame>


$ python3.10 -X utf8 -c 'import sys; print(ascii(sys.argv))' $'\U7fffbeba'
['-c', '\udcfd\udcbf\udcbf\udcbb\udcba\udcba']