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Note: I don't have Windows at home to test my patch on Windows. At 
least, the patch works correctly on Ubuntu Gutsy/i386.
Example to demonstrate the issue:
$ env -i a=a b=$(echo -e '--\xff--') c=c ./python -c "import os; 
os.execvp('/usr/bin/env', ['/usr/bin/env'])"
a=a
b=--�--
c=c
Patched Python:
$ env -i a=a b=$(echo -e '--\xff--') c=c ./python -c "import os; 
os.execvp('/usr/bin/env', ['/usr/bin/env'])"
a=a
c=c
I tested Python 2.5: b is also removed, but Python 2.6 keeps the 
variable b.