Part of the reason is still the lack of awareness that one can own Städte over Stadte.
In certain situations Stadte has value like you mentioned for those searching for german sites abroad or not on their own keyboards. Overall you are targetting a german speaking audience that is used to typing "Städte" for search so the natural progression is to type that into the broswer, and to brand it as such now that technology allows it.
Personally i would much rather have español over espanol. Especially long term.
http://www.google.com/trends?q=espa%...ate=all&sort=0