As the proposal states, "Top-level domain registries that implement internationalized domain name capabilities must do so only in strict compliance with all applicable technical standards." (That is only the first of four compulsory requirements.) ICANN thus links the registry contract to the official IDNS implementations approved by IETF.
The proposal states, correctly, that "adherence to published standards has resulted in a DNS that is reliable, scalable, resilient, predictable and globally authoritative." However, it glosses over the basic fact that all such adherence has been voluntary before now. TCP/IP's takeover of the data networking world was based on user adoption based on the network benefits of widespread compatibility. It was the hated rival, OSI, that sought and sometimes obtained official status as a government-approved standard.
Somewhat surprisingly, ICANN refrained from taking a more interventionist role in cybersquatting-related areas, "strongly" encouraging registries to permit only one language in any given domain name label.
The proposal has all over it the fingerprints of John Klensin, one of the world's foremost authorities on I-DNS and one of the least enthusiastic about the value contribution of IDN's to the Internet. Among IETF-ers, Klensin has always been the most trigger-happy about using ICANN's leverage over the industry to enforce technical correctness.
Whether or not this linkage is a good idea is a complicated issue and deserves widespread discussion. The discussion will begin Wednesday in Rio.