Vexing problem with read-char-exclusive (ELISP)

[Bob Newell]

If you run this minimal code:

(defun minimal-function ()
  (interactive)
    (while t
      (read-char-exclusive " ")
    )
)

everything works as expected, that is typed characters are simply absorbed 
until C-g exits the loop. But notice the " " as the prompt arg in 
read-char-exclusive. Why is it there?

Because if you run this:

(defun minimal-function ()
  (interactive)
    (while t
      (read-char-exclusive)
    )
)

and you pause typing input characters briefly, everything you've typed since 
you've invoked the function shows up in the echo area, like this:

ESC x m i n i m a l - f u n c t i o n RET a b c d e f g    (etc.)

I thought this might have something to do with minibuffer history, but I can't 
verify that, and I've dived into EMACS source code without luck (maybe without 
skill, too). I'm deep into keyboard.c and wondering...

Any ideas, leads, or help much appreciated. Running EMACS 23.3 on Linux Mint 13.