PORTAGE_BINHOST settings with spaces in die because portage isn't translating ' ' to %20. If portage was using FETCHCOMMAND or RESUMECOMMAND for downloading the tbz's it wouldn't matter as wget would translate, but it seems like its not using the FETCH/RESUMECOMMAND settings.
spaces are used as sperator for mulitple BINHOSTS.
err, my bad. that's not true for PORTAGE_BINHOST.
and if it were true that would be broken. http encoding should be being done.
Spaces are annoying, but I added encoding and an already-encoded test into CVS.
Bug has been fixed and released in stable portages on or before 2.0.51-r2