If a single word is typed into the URL bar and the return key pressed, ".com" is appended to the word thus creating a legal domain name and everything is peachy. If two words are typed into the URL bar and the return key is pressed, the space between them is URL encoded, then ".com" is appended to the ensuing string and things then get all pear-shaped when the DNS is passed a domain with an illegal "%" character within it. This causes DNS errors which will confuse the user. Either a hyphen should be substituted for the space, or the space stripped out before the ".com" is added and the URL sent to DNS. The domain name part of the URL should never have URL encoding applied to it.
Address bar behavior is part of Safari, not open source WebKit. Marking INVALID per our process, please file a bug via <http://bugreport.apple.com> for Apple engineers to investigate.