svn merge --reintegrate results in a false text conflict set on a binary file

Hello everybody,

I have discovered a scenario when svn merge --reintegrate results in a false
text conflict set on a binary file.

The scenario is simple:
1. add any binary file to the trunk,
2. create a branch from the trunk,
3. modify the binary at the trunk,
4. merge changes from trunk to the branch
5. repeat step 3,
6. try to merge the branch back to the trunk using "svn merge --reintegrate"
and get the following:

svn, version 1.5.6 (r36142)
   compiled Feb 26 2009, 22:41:36
svn merge file:///extra/playground/repos/branches/any_feature/
Conflict discovered in 'iota.tgz'.
Select: (p) postpone, (mf) mine-full, (tf) theirs-full,
        (h) help for more options:
--- Merging r3 through r7 into '.':
C iota.tgz

svn, version 1.6.6 (r40053)
   compiled Nov 8 2009, 13:10:49
Conflict discovered in 'iota.tgz'.
Select: (p) postpone,
        (mf) mine-full, (tf) theirs-full,
        (s) show all options: p
--- Merging differences between repository URLs into '.':
C iota.tgz
Summary of conflicts:
  Text conflicts: 1

Subversion server version in both cases:
svn, version 1.5.6 (r36142)
   compiled Feb 26 2009, 22:41:36

> svn pl iota.tgz
Properties on 'iota.tgz':
  svn:mime-type

> svn pg svn:mime-type iota.tgz
application/x-gzip

Any comment would be very appreciated! Is there anything I do wrong?
Been searching over bug tracker - no success.

A reproduction script is attached.

uname -a
Linux 2.6.27.25-78.2.56.fc9.i686 #1 SMP Thu Jun 18 12:47:50 EDT 2009 i686
i686 i386 GNU/Linux

Best regards,
Pavel