A simple test case. Sob. A simple test case. Oh, how I've missed you.
Given the good problem description and the simple test case, this shouldn't be hard to fix. I'll see what I can do. The behavior that you've described has bugged me for a while. I'm glad that you tracked down what was going on.
I wonder if this problem contributes to the problem of the shell process not dying when one click on the close button in rxvt...
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