To answer my own question (maybe) ... I guess this is because these are the replicate connections. RepServer has no way to know we are only going to replicate cp850 data. It only knows that the target is cp850 which cannot handle all the characters that *might* be sent through the RepServer which is utf8.
So although we know that the source is only going to be cp850 ... RepServer has know way of knowing what stupid things we might ask it to do - so issues a warning regardless. Makes sense I suppose. 
- A