This patch taken directly from upstream:

http://git.gnome.org/browse/libxml2/commit/?id=69f04562f75212bfcabecd190ea8b06ace28ece2

--- libxml2-2.7.6/encoding.c	Thu Sep 24 08:31:59 2009

+++ libxml2-2.7.6/new.encoding.c	Mon Oct 24 11:11:46 2011

@@ -1771,7 +1771,7 @@

     if (in == NULL) return(-1);

     /* calculate space available */

-    written = out->size - out->use;

+    written = out->size - out->use - 1; /* count '\0' */

     toconv = in->use;

     /*

      * echo '<?xml version="1.0" encoding="UCS4"?>' | wc -c => 38

@@ -1892,7 +1892,7 @@

     toconv = in->use;

     if (toconv == 0)

         return (0);

-    written = out->size - out->use;

+    written = out->size - out->use - 1; /* count '\0' */

     if (toconv * 2 >= written) {

         xmlBufferGrow(out, out->size + toconv * 2);

         written = out->size - out->use - 1;