Please see this bug and the long and heated discussion around it: https://bugzilla.gnome.org/show_bug.cgi?id=162726
The behaviour you want was actually the default behaviour before and was considered a bug by people using the Dvorak layout...
PS: That it works in gnome-terminal is considered a bug...
To type ä , unicode is U00E4
To type Ä , unicode is U00C4
If you want the unicodes of other characters, you can get them from gucharmap
To enter it manually, press ctrl+shift+u and followed by 00e4 and hit Enter , this should type ä
But there is a better way to do this using Compose Keys.
If you want to set your Right alt as the compose key using command line: just execute this :
gsettings set org.gnome.desktop.input-sources xkb-options "['compose:ralt']"
If you want to set it suing GUI :
Enable compose key by going to System Settings --> Keyboard --> Typing --> Right Alt. (you can chose a different key if you wish)
Thats all !!
Now go to your favorite text editor and do this :
Press and release Right Alt followed by " followed by a. now you should see ä .
The same can be done for Ä , Press and release Right Alt followed by " followed by A
NOTE : you might need to press Shift+' to get "
TIP:
If you wish to see all similar shortcuts view this file : /usr/share/X11/locale/en_US.UTF-8/Compose
Best Answer
I really like the way how Ubuntu 16.04 has solved the case on Macbook Air, here but I like the reverse way better about the fix in Macbook and PC. The tilde and backtick key will print the greater than and less than symbol, which I really like. This is very convenient also in PCs, and original thread. Edit
~/.xmodmaprc
Run
Find your keys by
xmodmap -pk | grep greater
; I really like the following configuration