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telnet -e "" or telnet -E still respond to ^@ as escape character. The problem is that ascii code of ^@ is equal to zero and the value of _POSIX_VDISABLE used in telnet source code is also set to zero by header files. The problem can be fixed by throwing <A HREF=ftp://ftp.sisalik.ee/pub/telnetfix/telnet-0.10-escapechar.patch>this</A> patch into telnet's source code (after the telnet-client.tar.gz file has been uncompressed). Netkit's default telnet (that is not used) does exactly the same tests as this patch. The fixed telnet source rpm as well as spec file, patch and i386 binary rpm are available at: ftp://ftp.sisalik.ee/pub/telnetfix I am sorry if this is a bad way to submit a bug fix. I did not want to upload this package to contrib or rhcn. If someone can contact me and explain how to do it in a right way I'd appriciate it.
I did e-mail my patch to bugzilla and it's visible from query page. I really have to start reading help screens and FAQ-s :-) I hope you can include my patch in next official release.
Fixed (by applying your patch) in telnet-0.10-28. Thanks for the patch.