VLC 2.0 Transcode with subtitles overlay broken?

[pdbpdb]

Since version 2.0 overlayed subtitles appears to be broken.

Subtitles are shown 1 letter per row.

In the messages log I see a lot of:
"freetype spu text error: Breaking unbreakable line"
and
"freetype spu text error: Truncated too high subtitle"

I am using this command to test it from from server side:

vlc.exe -vvv -I dummy "file:///D:/peliculas/pruebas/mp4/ts3.mp4" ":sub-file=file:///D:/peliculas/pruebas/mp4/ts3.srt" --sout=#transcode{soverlay,fps=25,ab=128,channels=1,vcodec=h264,vb=256,aenc=ffmpeg{aac-profile=low},venc=x264{no-cabac,trellis=0,profile=baseline,keyint=50,no-interlaced,ref=1,vbv-maxrate=256,vbv-bufsize=128,aq-mode=0,partitions=none,weightp=0,me=dia,subme=0,no-8x8dct,level=1.3,no-weightb,bframes=0,no-mixed-refs,no-mbtree},vfilter=canvas{width=640,height=480,aspect=4:3},audio-sync}:duplicate{dst=rtp{sdp=rtsp://0.0.0.0:5554/stream.sdp,no-sap,no-mp4a-latm,caching=2000}

in the client side (another vlc) I just open rtsp://127.0.0.1:5554/stream.sdp

I tried saving the .srt file as utf-8 and ansi but nothing worked.
Any help will be really appreciated.

Here's the messages log:
http://pastebin.com/3s9Sh69Z

here's a screenshot of how I see the subtitles in the movie:
http://dl.dropbox.com/u/26438463/screen.png

and here's the .srt file:
http://dl.dropbox.com/u/26438463/ts3.srt

[str3tmonk]

I'm having the exact same problem and I would appreciate any help how to fix this please

Thank you in advance.