is using non English words for paths recommended?
I use transliteration module in combination with pathauto module to transliterate any characters in my node title beyond ASCII 128 and automatically create friendly urls for each of my nodes.

This combination works really well! :)

Whether it is actually necessary or advantageous to remove unicode characters from your site's URLs is a subject on which I'm sure there would be many different opinions.

The Russian Wikipedia doesn't transliterate, but if you need to send your site's url's in an email, then things can quickly get out of hand and look ugly: http://ru.wikipedia.org/wiki/%D0%97%D0%B0%D0%B3%D0%BB%D0%B0%D0%B2%D0%BD%D0%B0%D1%8F_%D1%81%D1%82%D1%80%D0%B0%D0%BD%D0%B8%D1%86%D0%B0

I have no experience if unicode characters in URLs affect SEO.