It appears that stty flush and kill both get set to ^U somewhere -- stty flush should be ^O. This gets passed along when you telnet/rlogin to other hosts, and then ^U won't function as the line kill character.
I can't reproduce this here: [ notting@bobby:~ ]$ stty -a speed 9600 baud; rows 24; columns 80; line = 0; intr = ^C; quit = ^\; erase = ^?; kill = ^U; eof = ^D; eol = <undef>; eol2 = <undef>; start = ^Q; stop = ^S; susp = ^Z; rprnt = ^R; werase = ^W; lnext = ^V; flush = ^O; min = 1; time = 0; Do you have anything odd in your profile settings?
Sorry, I should have said: this is when running gnome-terminal in an X session (GNOME and Enlightenment). I notice that it doesn't happen from the text consoles (/dev/tty0 etc.). Thanks!
Tthis is fixed as of gnome-libs-1.0.54. There will be a set of update RPMs released including that version released shortly.