What you are seeing there are Ansi escape codes that are sent by Grails 2.0 processes. They make things appear in nice color for ansi capable terminals. Unfortunately the Eclipse console is not Ansi capable so these chars show up as garbage text.
Normally, our Grails command execution infrastructure will wrap the external grails process to massage the output and get rid of the garbage text.
I can't see how your changes would have any effect on this.... but... it seems for some reason this 'output cleanup' feature has been disabled somehow.
Try the following. Go to the Grails preferences page
Window >> Preferences
Groovy >> Grails >> Grails Launch
There should be an option there to 'Cleanup Grails 2.0 output' check whether this is enabled.
Kris De Volder -- SpringSource