Fix TypeError with IAC escaping

Declare the literal newline as a byte type when analyzing an input
sequence with a double IAC byte, fixing a lingering crash which
raised a TypeError in negotiate_telnet_options(). Add regression
testing for proper handling and deduplication of an inline IAC pair.
While we're here, improve the log message about undecodeable UTF-8
sequences to be clear it's not just some of the bytes which were
discarded.