You're right. I was assuming you're using html email. Sorry about the misunderstanding.
I think, though, that the problem may still be similar to what I suggested earlier.
Are you sure that the text you pasted into telnet used the ascii encoding? Plain text emails should use ascii. The tip off is that there is no GBP sign (£) in ascii.
The editor you were using to create the message (before you copied and pasted it) must be using another encoding. Ascii is a subset of ISO-8859-1. Especially in the extended codes over 128, the different encodings use the same numerical code to represent different characters--which can lead to the wackiness you saw.
If you used NotePad to create the message, it has an option to save a file in ansi, but not ascii. The ascii and ansi character sets are identical for character codes of 127 and less Character codes of 128 and higher are a combination of graphics and foreign-language characters. Windows uses the ANSI character set, which differs from the ASCII set for character codes of 128 and higher.
So it's likely that you've inadvertently pasted in text that uses another encoding, perhaps ansi.
These encodings are pretty confusing because they're transparent until something goes wrong.
There must be encoding translation tools. I'd love to hear about them, if anyone has any tips. Some web editor programs like Dreamweaver MX can switch between different encodings, but doesn't handle ascii because web pages don't use ascii.