It seems to be a severe problem for windows users, so I'd say they should be used as soon as possible.
I can confirm that with the latest patch (r14285) that convert all \t to spaces, bibtex works under windows. Lars, are you interested in merging 14285, 272, 270, 265, 261, 250, 238, 223 (convert sh -> python patches) to the 1.4.x branch? This will fix this bug and allow Joost to remove sh.exe from his windows installer. Of course, if 1.4.2 is releasing soon, this can wait till 1.4.3. Bo