Downloaded and installed the nightly build (TortoiseSVN 1.6.99, Build 18166 - 64 Bit -dev, 2010/01/03 02:56:11) and confirmed that the behavior I reported is fixed.
I noticed that the entry in the ChangeLog is not a part of 1.6.7. Will this fix not be integrated into the released build until 1.6.8?