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I know this is an old thread, but I actually spotted this issue while trying to fix it myself. I was able to fix it by using quotes and a literal space. So for example, instead of
RewriteRule ^/products/product%20name$ http://www.site.com/products/new-url [R=301,L]
use
RewriteRule "^/products/product name$" http://www.site.com/products/new-url [R=301,L]
Hope that helps.