You can cast those Unicode strings to normal strings using Evaluate keyword before you pass them to your library.
Something like this:
lib.py:
def foo(foo):
print type(foo)
test.txt
*** Settings ***
Library lib.py
*** Test Cases ***
demo
${bar} Evaluate str('bar')
foo ${bar}
What the best solution is depends on the exact situation. Maybe one solution is to write a keyword that does that casting for you and then calls the library function. Maybe the best option still is to just modify your library to accept Unicode strings. It depends.