PyCompactUnicodeObject was introduced with Python 3.3, and uses UTF-8 internally. It's used whenever both size and max code point are known, which is most cases where it comes from a literal or bytes.decode() call. Cut memory usage in typical Django applications by 2/3 when it was implemented.

https://peps.python.org/pep-0393/

I would probably use UTF-8 and just give up on O(1) string indexing if I were implementing a new string type. It's very rare to require arbitrary large-number indexing into strings. Most use-cases involve chopping off a small prefix (eg. "hex_digits[2:]") or suffix (eg. "filename[-3:]"), and you can easily just linear search these with minimal CPU penalty. Or they're part of library methods where you want to have your own custom traversals, eg. .find(substr) can just do Boyer-Moore over bytes, .split(delim) probably wants to do a first pass that identifies delimiter positions and then use that to allocate all the results at once.