For those interested, libtelnet is now part of Fedora, for F-12 and forward. That means that if you need a TELNET processing library that actually Does It Right™, you don't need to worry about complicated external dependencies if you use Fedora as your platform. I may or may not work on getting it into Ubuntu as well (I use Ubuntu on my server, but I use an LTS release, so testing packages on newer Ubuntu distributions isn't quite so straight forward for me as it is for Fedora). libtelnet supports most TELNET extensions used in MUDs, including MCCPv2, and also does ZMP and MSSP. It does not handle protocols that sit above the TELNET layer such as MXP, MCP, or MSP. There's also the libtelnet-utils package that includes telnet-proxy, which is totally ****ing awesome for debugging and testing TELNET code, which is useful even if you don't plan on using libtelnet itself in your code. GNOME-MUD and CLC will also soon be in the Fedora repositories.
At some point I will also be pushing at least libtelnet into the EPEL for CentOS users, but I wouldn't hold my breath waiting. My free time is all but going to disappear starting tomorrow, unfortunately.