Great! As for the killing/restarting explorer.... That's an effect of the explorer shell extension. It's a DLL that links into explorer, but it can't be replaced (on install) until explorer releases it, which usually requires a stop/start. I'll do some research into this to see what the alternatives are. But yes, it can be irritating.
OK, tried again with RC1 with 'allow server to change colors' unchecked. Now I see just white text without a black background. However, at the point where the color switch (white text on black background) *would* have happened, all text is changed to bold (still) black text. If I want to get rid of that, I then have to Disconnect and (re)Connect the session after which the text returns to the expected simple non-bold black text for all new text output. See attached.
Is that something that can be fixed/changed? Or done with a selection of a different font, "translation," terminal type, etc.? All I want is simple black text on a while background. If not, maybe I should try to find a simpler 'dumber' telnet program that just displays simple text.