I think that the bar should
at least be set higher than:
"Your name does not fit into a Western firstname/lastname
format with only ASCII characters, please choose another
name."
This is on par with
expecting everyone to speak English just because you speak English. By the very setup of the form, you are implying that your way is the 'one true way' or at least that you don't care about people that don't fit into your pre-defined set of expectations (i.e. "Don't have a firstname/lastname? I don't care about your business! Your money is no good here!").
How hard is it to just have a 'Name' field that supports UTF8? Sure it's not a 100% solution, but it's a lot better than the 20% (or less) solutions that we have out there right now.