Quick re-review requested; here's the incremental diff 

=== modified file 'bzrlib/builtins.py'
--- bzrlib/builtins.py	2009-11-04 22:32:13 +0000
+++ bzrlib/builtins.py	2009-12-08 09:06:02 +0000
@@ -2323,7 +2323,10 @@
             # Build the log formatter
             if log_format is None:
                 log_format = log.log_formatter_registry.get_default(b)
+            # Make a non-encoding output to include the diffs - bug 328007
+            unencoded_output = ui.ui_factory.make_output_stream(encoding_type='exact')
             lf = log_format(show_ids=show_ids, to_file=self.outf,
+                            to_exact_file=unencoded_output,
                             show_timezone=timezone,
                             delta_format=get_verbosity_level(),
                             levels=levels,

=== modified file 'bzrlib/log.py'
--- bzrlib/log.py	2009-10-29 03:32:42 +0000
+++ bzrlib/log.py	2009-12-08 09:17:21 +0000
@@ -1291,10 +1291,13 @@
     preferred_levels = 0
 
     def __init__(self, to_file, show_ids=False, show_timezone='original',
-                 delta_format=None, levels=None, show_advice=False):
+                 delta_format=None, levels=None, show_advice=False,
+                 to_exact_file=None):
         """Create a LogFormatter.
 
         :param to_file: the file to output to
+        :param to_exact_file: if set, gives an output stream to which 
+             non-Unicode diffs are written.
         :param show_ids: if True, revision-ids are to be displayed
         :param show_timezone: the timezone to use
         :param delta_format: the level of delta information to display
@@ -1307,7 +1310,13 @@
         self.to_file = to_file
         # 'exact' stream used to show diff, it should print content 'as is'
         # and should not try to decode/encode it to unicode to avoid bug #328007
-        self.to_exact_file = getattr(to_file, 'stream', to_file)
+        if to_exact_file is not None:
+            self.to_exact_file = to_exact_file
+        else:
+            # XXX: somewhat hacky; this assumes it's a codec writer; it's better
+            # for code that expects to get diffs to pass in the exact file
+            # stream
+            self.to_exact_file = getattr(to_file, 'stream', to_file)
         self.show_ids = show_ids
         self.show_timezone = show_timezone
         if delta_format is None:
@@ -1463,9 +1472,11 @@
                                 short_status=False)
         if revision.diff is not None:
             to_file.write(indent + 'diff:\n')
+            to_file.flush()
             # Note: we explicitly don't indent the diff (relative to the
             # revision information) so that the output can be fed to patch -p0
             self.show_diff(self.to_exact_file, revision.diff, indent)
+            self.to_exact_file.flush()
 
     def get_advice_separator(self):
         """Get the text separating the log from the closing advice."""

=== modified file 'bzrlib/ui/__init__.py'
--- bzrlib/ui/__init__.py	2009-11-16 02:56:00 +0000
+++ bzrlib/ui/__init__.py	2009-12-08 08:40:11 +0000
@@ -146,12 +146,7 @@
             encoding = osutils.get_terminal_encoding()
         if encoding_type is None:
             encoding_type = 'replace'
-        # For whatever reason codecs.getwriter() does not advertise its encoding
-        # it just returns the encoding of the wrapped file, which is completely
-        # bogus. So set the attribute, so we can find the correct encoding later.
         out_stream = self._make_output_stream_explicit(encoding, encoding_type)
-        if not getattr(out_stream, 'encoding', None):
-            out_stream.encoding = encoding
         return out_stream
 
     def _make_output_stream_explicit(self, encoding, encoding_type):

=== modified file 'bzrlib/ui/text.py'
--- bzrlib/ui/text.py	2009-11-16 02:56:18 +0000
+++ bzrlib/ui/text.py	2009-12-08 09:17:34 +0000
@@ -161,6 +161,10 @@
         else:
             encoded_stdout = codecs.getwriter(encoding)(self.stdout,
                 errors=encoding_type)
+            # For whatever reason codecs.getwriter() does not advertise its encoding
+            # it just returns the encoding of the wrapped file, which is completely
+            # bogus. So set the attribute, so we can find the correct encoding later.
+            encoded_stdout.encoding = encoding
             return TextUIOutputStream(self, encoded_stdout)
 
     def note(self, msg):
@@ -400,6 +404,10 @@
     def __init__(self, ui_factory, wrapped_stream):
         self.ui_factory = ui_factory
         self.wrapped_stream = wrapped_stream
+        # this does no transcoding, but it must expose the underlying encoding
+        # because some callers need to know what can be written - see for
+        # example unescape_for_display.
+        self.encoding = wrapped_stream.encoding
 
     def flush(self):
         self.ui_factory.clear_term()