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/usr/share/doc/telnet/BUGS is in telnet 0.17-41.

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The actual contents of the file can be viewed below.

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telnet:
	- will apparently sometimes assert in ungetch. I think I've
	  fixed this, so if you still see it let me know.
	- hangs if you telnet to chargen port and push ^Z 
	  (due to bogus protocol negotiation attempts)
	- binary mode doesn't handle crlf right
	- should warn if the connection isn't encrypted

telnetd:
	- hangs if you do the following:
		telnet
		log in
		cat >/dev/null
		type 256 'a's with no CRs
	    *THIS IS A KERNEL BUG*  Patch enclosed.
	
	- crashes in ncurses if the terminal type is undefined,
	  with some versions of ncurses.
	- should allow passing random user envs as "TELNET_*"
	- should set REMOTEHOST to the remote hostname
	- passes login the -p flag instead of sending envs explicitly
	- should only use included logout() et al. if real ones aren't 
	  available in system libs.
	- addarg() in sys_term.c does some very questionable casts.