I just tested it with Firefox 3, Safari and Opera on a Mac (OS X 10.5.4) and both with the space and without worked fine. I tried with both charset iso-8859-1 and utf-8.
Does it work on Safari on your machine? Is it happening with a specific font?
I have noticed some odd issues with Firefox character encoding on both 2 and 3. For example on Webmaster World with Firefox 2 I used to get a bunch of ? marks throughout some posts. Now I see the ?s for a split second on load and then it corrects itself. Safari always showed the posts fine.