Snuggles, without ascii characters and with every variation of "ascii e's" was taken.
But I knew the Snüggles name was fine... so reserved that.

So no problem at all in creating the toons with ascii lettering on a US server.

My process was:
a) reserve the name, well in advance
b) transfer the toon
c) delete the toon with the reserved name
d) customize the transferred toon

Unfortunately Cuddlés was available, but it would not allow me to use this once I entered it as the initial name.
I knew how to generate the ü in Snuggles...
So I now have: Cüddles, Hugglés, Kissés, Ticklés, and Snüggles... the others talked Judsea into getting a more appropriate name for the team (Kissés).