Well... ae could be used for æ, oe for ø, and aa for a, but... I think they should be preserved as they are, for that's the way they are. The Danish language uses æøå thus Danish songs do too, and it shouldn't be tampered with. If one wants to search for a song with ISO-8859-1 characters in it, one should use just those ones. Or you could add a 'conversion' for database queries, so that, ie., when one searches for something with ae, it searches for both 'ae' and 'æ'.
Just my -/5 :)