# create 2 svn repositories (internally these can be 2 folders on same SVN server of course)
# configure 2nd folder to include one folder and one file (try binary file, like "favicon.ico") via "svn:externals" property
# checkout 2nd folder
# try running `arc diff`
Before this would result in UTF-8 encoding error on binary file that came from "svn:externals". Now file will be properly skipped.