the current texi2dvi ... no longer handles TEXINPUTS values
    correctly which contain braces.  

I've made the change below, and installed the current texi2dvi in TeX
Live (all platforms).  Let me know if problems persist (wouldn't
surprise me).

Thanks,
karl

--- texi2dvi.~1.132.~   2008-07-27 16:14:03.000000000 -0700
+++ texi2dvi    2008-08-10 17:12:33.000000000 -0700
@@ -581,4 +581,11 @@ absolute_filenames ()
       *)
-       if test -d $dir; then
+       if test -d "$dir"; then
          res=$res$path_sep`absolute "$dir"`
+       else
+         # Even if $dir is not a directory, preserve it in the path.
+         # It might contain metacharacters that TeX will expand in
+         # turn, e.g., /some/path/{a,b,c}.  Although this will not get
+         # the implicit absolutification of the path, we can only do
+         # what we can do.
+         res=$res$path_sep$dir
        fi




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