To replicate, in Python 3.1 on Linux (utf-8 console):

>>> print(chr(0x9000))
退

Copy and paste this character into the prompt. It appears correctly (as a Chinese character). Then:

>>> import readline
>>> readline.parse_and_bind('"\M-i":"    "')

Now try to paste the character again: it appears as "    ��"
 (four spaces, two unknown character symbols), and if you press return, you get a SyntaxError.

This happens with all characters beginning with \xe9: In UTF-8, that's 0x9000-0x9fff. If the terminal encoding is changed to cp1252, I'm told that the same thing can be achieved with é, which is \xe9 there.