The {{PAGENAME}} variable does not work properly when
used in external links with pages with spaces in the
title. Consider a page called "Namespace:My page".
If you use something like
[http://en.wikipedia.org/w/wiki.phtml?title={{NAMESPACE}}:{{PAGENAME}}&action=edit
click here]
on "Namespace:My page", it will produce a link like this:
"page&action=edit click here" which links to the URL
"http://en.wikipedia.org/w/wiki.phtml?title=My"
This bug makes it tough to create templates that have
links to edit pages or subpages.
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What you want would require a new substitution variable which provides
a URL-escaped version of the page name. Reassigning from bugs to
feature requests.
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This is now implemented in cvs. The key code is {{PAGENAMEE}}.