Arabic Characters in URL

Edit : To answer your question points directly.

[1] Yes they will work fine due to Internationalized Resource Identifiers.

[2] If you are targeting Arabic search results then yes having arabic in the url bar is good for SEO. I am sure Google does clever translation stuff tho as well.

[3] Copy pasting the URL will look funny due to [1] If you look at Arabic wikipedia and try copy paste their url somewhere you will see what I mean.

More information

I know Google does put some weight into what is in the url so for example having page-title.aspx will be better than pagetitle. I would imagine that the same rules apply for having foreign language urls - it will help increase results when people are searching for terms that are included in your arabic word.

Most browsers will deal with it fine I don't think you need to have a special language pack installed. Arabic Wikipedia works fine though the characters get mapped using Internationalized Resource Identifiers.

https://webapps.stackexchange.com/questions/15539/how-do-special-foreign-language-characters-in-an-url-work-and-are-they-fake

So will look fine in your url bar but will look like this http://ar.wikipedia.org/wiki/%D8%A7%D9%84%D8%B5%D9%81%D8%AD%D8%A9_%D8%A7%D9%84%D8%B1%D8%A6%D9%8A%D8%B3%D9%8A%D8%A9 when copied.

I always liked how backspace and delete work the other way around with Arabic text.