Hi Betty, I don't know whether other languages that use those characters place them at the end of the alphabet or not. I checked with French accent marks, and it does the same thing, but it is appropriate there because in French the accented vowels should sort with the unaccented versions. And I don't know of any way to get PAF to change the sort order.
One advantage of sorting them with the A's and O's is that when documents leave off the diacritical marks (which is the norm in the case of immigrants) the names are still sorted together. I wish there was a way to get names to sort together in one of my lines where the name seems to alternate between the different spellings Waller and Walder (and occasionally Walter). But unless I rename people it isn't going to happen. So I will just put up with the inconvenience.