Duplicity 0.42 is the latest version in portage, and also the latest version available on the project homepage [ http://duplicity.nongnu.org/ ]. It seems that development ground to a halt back in 2002. There is a bug preventing use of duplicity built using the gentoo ebuild with sftp (using the scp:// url syntax) where the remote /bin/sh is actually bash. The bug arises because 'echo -e' doesn't behave as the author intended under this (fairly common) configuration. This has been patched in various distributions, including, for example, Debian. Substituting "printf" for "echo -e" (as seems to have been done for Debian) in src/backends.py:298 resolves this problem for me, and I have verified this by creating a patch which I'm now using myself from an overlay. For obvious disaster-recovery reasons, it would be advantageous if this patch were included in the official Portage... I'm not sure how to go about this... I can offer my ebuild - though I make no guarantees that it meets any stylistic expectations for portage... and, in any case, this seems a trivial change.
I'll have a look at this in few hours when I'm back from work. It should be a simple sed hack, or a patch which goes to $FILESDIR at worst, so there's no need to post an ebuild.
I just committed 0.4.2-r1, with fixes to this and one other bug from our bugzilla. A sed call was enough. Feel free to reopen if something else needs to be done in this regard. Thanks for reporting!