Index: wp-includes/formatting.php
===================================================================
--- wp-includes/formatting.php	(revision 23356)
+++ wp-includes/formatting.php	(working copy)
@@ -785,6 +785,18 @@
 		chr(199).chr(155) => 'U', chr(199).chr(156) => 'u',
 		);
 
+		// Used for locale-specific rules
+		$locale = get_locale();
+
+		if ( 'de_DE' == $locale ) {
+			$chars = array_merge( $chars, array(
+				chr(195).chr(132) => 'Ae', chr(195).chr(164) => 'ae',
+				chr(195).chr(150) => 'Oe', chr(195).chr(182) => 'oe',
+				chr(195).chr(156) => 'Ue', chr(195).chr(188) => 'ue',
+				chr(195).chr(159) => 'ss',
+			) );
+		}
+
 		$string = strtr($string, $chars);
 	} else {
 		// Assume ISO-8859-1 if not UTF-8