I'm still struggling with this. I tried the settings you mentioned, fbreader still continues to truncate the spaces. With okular though I was able to see that the spaces are indeed preserved.
Which reader did you use in the screenshot you put up? Was it fbreader itself?
One more thing is that the rfc text is preformatted with hard-line breaks but your screenshot seems to show a fine formatting irrespective of the line breaks.
I tried all the paragraph formatting options I wasn't able to achieve your results. Was the screenshot from a PB302 or a larger device?