Easiest way to reproduce this bug is to add phonetic Russian layout so Russian "L" will be on the same button where is English "L" in QWERTY, then go to http://google.com and try to enter Russian "L": if query predictions are turned on, nothing will be entered. Google is not the only affected search engine. Popular in Russia search engine http://ya.ru is also affected when query predictions are turned on. But in ya.ru behavior is different: Russian "L" appears for a moment, then immediately disappears. The fact that query predictions are turned on by default in both mentioned search engines basically makes Konqueror 4.7.4 unusable for typical Russian user or for somebody who does not want to turn off query predictions but wants to use Russian language when searching the Web. If this does not qualify as major bug, feel free to correct the severity. This happens only with khtml, it does not happen if I choose WebKit instead. And it doesn't happen in any other browser I have tried (Iceweasel, Chrome).
This bug is still present in KDE/Konqueror 4.8.3.
*** This bug has been marked as a duplicate of bug 294479 ***