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I am getting more or less the same problems on Red Hat Linux Advanced
Server release 2.1AS (Pensacola).
I start gqlplus like:
# gqlplus /nolog
SQL > connect username/pass
SQL > select tname from tab order by tname;
SP2-0029: command buffer space exhausted

However, when I start it like:
# gqlplus username/pass
SQL > select tname from tab order by tname;

All works fine.

Looks like a nice scenario that you should be able to fix!
Thanks in advance.