>  hello is now overwritten by the prompt, and even that is displayed
>  incorrectly.

Using your example (with bash-3.0-12), I get this output (more colorful of 
course):

   [EMAIL PROTECTED]:~# echo -n hallo 
   [EMAIL PROTECTED]:~# 

Which is highly expected by me. However, depending on your shell and said
shell's version and/or configuration, the prompt might overwrite the text,
too.

That is absolutely correct behaviour on the part of the terminal.

And likely correct behaviour on part of your shell, too.

-- 
                The choice of a
      -----==-     _GNU_
      ----==-- _       generation     Marc Lehmann
      ---==---(_)__  __ ____  __      [EMAIL PROTECTED]
      --==---/ / _ \/ // /\ \/ /      http://schmorp.de/
      -=====/_/_//_/\_,_/ /_/\_\      XX11-RIPE


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