Does .FR support IDN characters?

Yes, it supports the following characters:

à, á, â, ã, ä, å, æ, ç,è, é, ê, ë, ì, í, î, ï, ñ, ò, ó, ô, õ, ö, œ, ù, ú, û, ü, ý, ÿ, ß