Here is how you can use a specific collation instead of the default collation for a given table/column. I'm assuming you always want that to be the case insensitive utf8_general_ci, but you can easily change that in the code or add it as a variable.
Note the use of the params kwarg instead of the db literal function. Params exists for the exact same purpose.
def iexact(**kw):
fields = [['%s=%%s collate utf8_general_ci'%field,value] for (field,value) in kw.items()]
return dict(where=[f[0] for f in fields], params=[f[1] for f in fields])
if User.objects.extra(**iexact(username='joeblow')).exists():
status = "Found a user with this username!"