When I want to generate usernames from real names, which can contain non-ascii characters, you can’t simply ignore the unicode characters. For instance, firstname.lastname@example.org is the right e-mail address for DaniŽlle, email@example.com isn’t.
There’s trick. Unicode has got a single code for Ž itself, but it has also got a code which (simplified) adds ® on top of the previous character. The unicode standard defines a normal form in which (at least) all such characters, which can be, are represented using such modifiers. If you then simply ignore the non-ascii representable codes, you’ll get the desired result.
unicodedata.normalize('NFKD', txt).encode('ASCII', 'ignore').
However, this isn’t the right solution. For instance, in german, one prefers ue as a replacement of Ł over u.