can't pass unicode name to external diff program

While trying to run kdiff3 (external difference program) via an bzr alias to external diff extension. Probably the ë in the directory name is causing the pain...

Command window and logging follows:

L:\eLibrary\Books\W\De Wit\Natuur en Menschen in Indië>bzr kdiff NatuurMenschen-0.3.tei
=== modified file 'W/De Wit/Natuur en Menschen in Indi+½/NatuurMenschen-0.3.tei'
bzr: ERROR: exceptions.UnicodeEncodeError: 'ascii' codec can't encode character u'\xeb' in position 51: ordinal not in r
ange(128)

Traceback (most recent call last):
  File "bzrlib\commands.pyo", line 893, in run_bzr_catch_errors
  File "bzrlib\commands.pyo", line 839, in run_bzr
  File "bzrlib\commands.pyo", line 539, in run_argv_aliases
  File "bzrlib\commands.pyo", line 853, in ignore_pipe
  File "bzrlib\builtins.pyo", line 1617, in run
  File "bzrlib\diff.pyo", line 426, in show_diff_trees
  File "bzrlib\diff.pyo", line 831, in show_diff
  File "bzrlib\diff.pyo", line 891, in _show_diff
  File "bzrlib\diff.pyo", line 914, in diff
  File "bzrlib\diff.pyo", line 492, in _diff_many
  File "bzrlib\diff.pyo", line 747, in diff
  File "bzrlib\diff.pyo", line 688, in _execute
  File "subprocess.pyo", line 594, in __init__
  File "subprocess.pyo", line 816, in _execute_child
UnicodeEncodeError: 'ascii' codec can't encode character u'\xeb' in position 51: ordinal not in range(128)

bzr 1.10 on python 2.5.2 (win32)
arguments: ['bzr', 'kdiff', 'NatuurMenschen-0.3.tei']
encoding: 'cp1252', fsenc: 'mbcs', lang: None
plugins:
  bzrtools F:\Programs\Bazaar\plugins\bzrtools [1.10]
  launchpad F:\Programs\Bazaar\plugins\launchpad [unknown]
  qbzr C:\Documents and Settings\Jeroen\Application Data\bazaar\2.0\plugins\qbzr [0.9.5]
  svn F:\Programs\Bazaar\plugins\svn [0.4.16]
*** Bazaar has encountered an internal error.
    Please report a bug at https://bugs.launchpad.net/bzr/+filebug
    including this traceback, and a description of what you
    were doing when the error occurred.

L:\eLibrary\Books\W\De Wit\Natuur en Menschen in Indië>

====

From .bzr.log

====

Thu 2009-03-05 00:01:33 +0100
0.532 bzr arguments: [u'commit', u'.']
0.532 looking for plugins in C:/Documents and Settings/Jeroen/Application Data/bazaar/2.0/plugins
0.578 looking for plugins in F:/Programs/Bazaar/plugins
0.610 Plugin name qbzr already loaded
1.375 bzr-svn: using Subversion 1.5.4 ()
1.672 encoding stdout as sys.stdout encoding 'cp437'
2.500 opening SVN RA connection to 'file:///L:/eLibrary/Books/W/De%20Wit/Natuur%20en%20Menschen%20in%20Indi%C3%AB'
2.532 Unable to open <bzrlib.transport.local.LocalTransport url=file:///L:/eLibrary/Books/W/De%20Wit/Natuur%20en%20Menschen%20in%20Indi%C3%AB/> with Subversion: Unable to open an ra_local session to URL
2.532 opening SVN RA connection to 'file:///L:/eLibrary/Books/W/De%20Wit'
2.532 Unable to open <bzrlib.transport.local.LocalTransport url=file:///L:/eLibrary/Books/W/De%20Wit/> with Subversion: Unable to open an ra_local session to URL
2.532 opening SVN RA connection to 'file:///L:/eLibrary/Books/W'
2.547 Unable to open <bzrlib.transport.local.LocalTransport url=file:///L:/eLibrary/Books/W/> with Subversion: Unable to open an ra_local session to URL
2.625 opening working tree 'L:/eLibrary/Books'
2.766 preparing to commit
[ 652] 2009-03-05 00:01:38.108 INFO: Committing to: L:/eLibrary/Books/
4.157 Selecting files for commit with filter [u'W/De Wit/Natuur en Menschen in Indi\xeb']
[ 652] 2009-03-05 00:01:38.921 INFO: modified W/De Wit/Natuur en Menschen in Indië/NatuurMenschen-0.3.tei
8.032 check paths: [u'W/De Wit/Natuur en Menschen in Indi\xeb']
[ 652] 2009-03-05 00:02:01.562 INFO: Committed revision 1029.
28.078 return code 0

Thu 2009-03-05 20:34:50 +0100
0.328 bzr arguments: [u'kdiff', u'NatuurMenschen-0.3.tei']
0.344 looking for plugins in C:/Documents and Settings/Jeroen/Application Data/bazaar/2.0/plugins
0.375 looking for plugins in F:/Programs/Bazaar/plugins
0.406 Plugin name qbzr already loaded
1.187 bzr-svn: using Subversion 1.5.4 ()
2.265 opening SVN RA connection to 'file:///L:/eLibrary/Books/W/De%20Wit/Natuur%20en%20Menschen%20in%20Indi%C3%AB/NatuurMenschen-0.3.tei'
2.281 Unable to open <bzrlib.transport.local.LocalTransport url=file:///L:/eLibrary/Books/W/De%20Wit/Natuur%20en%20Menschen%20in%20Indi%C3%AB/NatuurMenschen-0.3.tei/> with Subversion: Unable to open an ra_local session to URL
2.297 opening SVN RA connection to 'file:///L:/eLibrary/Books/W/De%20Wit/Natuur%20en%20Menschen%20in%20Indi%C3%AB'
2.297 Unable to open <bzrlib.transport.local.LocalTransport url=file:///L:/eLibrary/Books/W/De%20Wit/Natuur%20en%20Menschen%20in%20Indi%C3%AB/> with Subversion: Unable to open an ra_local session to URL
2.297 opening SVN RA connection to 'file:///L:/eLibrary/Books/W/De%20Wit'
2.297 Unable to open <bzrlib.transport.local.LocalTransport url=file:///L:/eLibrary/Books/W/De%20Wit/> with Subversion: Unable to open an ra_local session to URL
2.312 opening SVN RA connection to 'file:///L:/eLibrary/Books/W'
2.312 Unable to open <bzrlib.transport.local.LocalTransport url=file:///L:/eLibrary/Books/W/> with Subversion: Unable to open an ra_local session to URL
2.406 opening working tree 'L:/eLibrary/Books'
4.297 Traceback (most recent call last):
  File "bzrlib\commands.pyo", line 893, in run_bzr_catch_errors
  File "bzrlib\commands.pyo", line 839, in run_bzr
  File "bzrlib\commands.pyo", line 539, in run_argv_aliases
  File "bzrlib\commands.pyo", line 853, in ignore_pipe
  File "bzrlib\builtins.pyo", line 1617, in run
  File "bzrlib\diff.pyo", line 426, in show_diff_trees
  File "bzrlib\diff.pyo", line 831, in show_diff
  File "bzrlib\diff.pyo", line 891, in _show_diff
  File "bzrlib\diff.pyo", line 914, in diff
  File "bzrlib\diff.pyo", line 492, in _diff_many
  File "bzrlib\diff.pyo", line 747, in diff
  File "bzrlib\diff.pyo", line 688, in _execute
  File "subprocess.pyo", line 594, in __init__
  File "subprocess.pyo", line 816, in _execute_child
UnicodeEncodeError: 'ascii' codec can't encode character u'\xeb' in position 51: ordinal not in range(128)

4.297 return code 4