I use Pathauto, Transliteration and i18n.
Conversion of German umlauts
works great (see ↓) for node patterns (I use the 'Default path pattern', not the language specific ones). "Übung" becomes "uebung". Great.
But for taxonomy patterns, this does not work. "Übung" becomes "ubung". I tried both tokens,
It seems that Pathauto (or Transliteration?) does not know that the term name is in German. Although I set the vocabulary to the translation mode 'Translate' (means that each term has a language set).