Yeah - MT’s telnet console is seriously whacked for things like this.
I use s/\P{IsPrint}//g (Perl) on each line of output from the MT to remove all non printable characters (non-ascii). It works semi OK, but it’s still not 100%
EDIT: What you are seeing is ANSI escape sequences - there’s nothing available from MT to disable ANSI on the telnet console.
EDIT2: And as not everything is supported / possible through the API, Telnet is unfortunately STILL the only way to do certain things, so API does not rulezz