Effect of IE7 "Send UTF-8 URLs" option

Hello,
Does anyone know what "Send UTF-8 URLs" option in Internet Explorer 7 does?

I tried posting a form that includes non-ASCII characters in a form
variable's value at http://test/XXYY.cgi where XX and YY are Japanese
characters.  The form itself is written in EUC-JP encoding.

I was expecting this option would affect how one of both of the URL path
(XXYY.cgi) and the search-strings (?key=value) is turned into the
hexadeciaml encoding.

But my experiment result is that regardless of the option setting, IE 7
interprets the URL path as UTF-8 and the search-strings as EUC-JP (the
form's encoding), and generrates the %hh%hh... hex escapes.

(Note: There is a recnet IE bug that relates to UTF-8 option:
http://support.microsoft.com/default.aspx/kb/935729
but what I see is different because I didn't use frames.)

I am puzzled.

-- 
KUROSAKA (Kuro) Teruhiko
San Francisco, California, USA