Conversion on the fly from KOI8-R to WIN1251 is invalid

CREATE DATABASE TEST WITH ENCODING =3D 'KOI8';
CREATE TABLE TEST (LOGIN VARCHAR);

SET CLIENT_ENCODING 'KOI8';

INSERT INTO TEST (LOGIN) VALUES ('\206pesto\206');

SELECT LOGIN FROM TEST;
It's return string '=86pesto=86';

Then i try
SET CLIENT_ENCODING =3D 'WIN';

SELECT LOGIN FROM TEST;
It's return string 'pesto '

The code of last char in this string (in decimals) is 32 (space).
Why? Where the chars with code 206 (in octal) ?
Is this bug?