Unicode error in writing files to disk

There are problems with unicode encoding while writing files to disk:

Offending bug is internal version of bug Trac:#111
"Trac login, deliberate annonymous/authenticated login"
Offending bytes is a sequence of chr(160) ('NO-BREAK SPACE')
u"Launchpad login:\n\xa0\xa0\xa0\xa0* Look up"

The Unicode Howto:
http://docs.python.org/howto/unicode.html

shell command:
../../bsync.py sync --since 2012-2-20

While communicating with ``diff3`` the program raises this error:

Traceback (most recent call last):
  File "../../bsync.py", line 31, in <module>
    bsync.main()
  File "/home/eike/codedir/z-eclipse-workspace/bug_syncer/trunk/src/bug_syncer/main.py", line 96, in main
    self.do_sync(cmdinfo)
  File "/home/eike/codedir/z-eclipse-workspace/bug_syncer/trunk/src/bug_syncer/main.py", line 262, in do_sync
    syncer.synchronize_repos()
  File "/home/eike/codedir/z-eclipse-workspace/bug_syncer/trunk/src/bug_syncer/main.py", line 818, in synchronize_repos
    write_tasks = [self.merge_bug(mtask) for mtask in merge_tasks]
  File "/home/eike/codedir/z-eclipse-workspace/bug_syncer/trunk/src/bug_syncer/main.py", line 687, in merge_bug
    merged_txt = self.merge_diff3(my_txt, base_txt, other_txt)
  File "/home/eike/codedir/z-eclipse-workspace/bug_syncer/trunk/src/bug_syncer/main.py", line 616, in merge_diff3
    os.write(old_fd, old_text); os.close(old_fd)
UnicodeEncodeError: 'ascii' codec can't encode characters in position 177-180: ordinal not in range(128)