For now I can only reproduce this when the hostname is 3, 4, 5 or 6 characters long, and the directory name 9, 10 or 11 characters long. Try setting PS1='\[\e[1;32m\]xxyyzz \[\e[1;34m\]\w \$\[\e[0m\] ', then mkdir ĉaĉaĉaĉaĉ, cd ĉaĉaĉaĉaĉ, ls somefile, ^R so See attached typescript for an example. I've unset PROMPT_COMMAND to get rid of the extra output. This is on a Konsole, with Encoding set to Unicode (utf8).
Created attachment 118180 [details] examples of ^R showing a mess
*** This bug has been marked as a duplicate of bug 156292 ***
Sorry, vapier, this is not a duplicate. The other bug is about colours in the PS1 prompt (with any type of characters), this is about multibyte characters in the directory name (while any colour is irrelevant). Here is a simpler recipe: PS1='xxyy \W \$ ' LC_ALL=en_GB.utf8 mkdir ĉaĉaĉaĉaĉa cd ĉaĉaĉaĉaĉa/ ls somefile ^R so
Created attachment 118229 [details] example of ^R messing up with a colourless prompt
Yes. This is completely different issue. I've just sent my observations upstream and hope Chet will fix this soon.
you can retry with 3.2_p33 as it has some invisible byte fixes
seems to work for me with bash-4.2