[waqf]

Confusingly, though, German does render Latin æ, œ as ä, ö (ästhetisch, ökonomisch)

[_delirium]

True, although I believe than in itself is only a slightly older (circa 1900) spelling reform. In older German books, you see Aesthetik/aesthetische/etc. instead. Lots of borrowing and adaptation...

Ngrams: https://books.google.com/ngrams/graph?content=Aesthetik%2C%C...

Random example: http://books.google.com/books?id=7ZpJAAAAMAAJ&printsec=front...