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I agree that it is a server error to put something that doesn't 
meet the syntactic definition of a URI in the Location header 
of a response. I don't see any harm in correcting obvious 
errors, though, in the interest of usability.

As for your proposed fix, instead of just correcting spaces, I 
would do

    newurl = quote(newurl, safe="/:=&?#+!$,;'@()*[]")

quote() is a urllib function that does percent-encoding. It is 
way out of date and does poorly with Unicode strings, but if 
called with the above arguments, it should safely clean up 
most mistakes. The set of additional "safe" characters I am 
passing in is the complete set of "reserved" characters 
according to the latest draft of RFC 2396bis; these are 
characters that definitely do or might possibly have special 
meaning in a URL and thus should not be percent-encoded 
blindly.

I am currently working on a urllib.quote() replacement for 
4Suite's Ft.Lib.Uri library, and will then see about getting the 
improvements folded back into urllib.