The telnetd daemon needs to write utmp and wtmp records when user logs out. There is no code to do this in the current daemon. The impact of this is that if user logs in over telnet, (and logs out), she can't be deleted (because userdel looks at utmp records). Writing correct utmp/wtmp helps with overall accounting. The functions logout() and logwtmp() provide the necessary hooks, but they are under -lutil in glibc.
Fixed in git, please test it.
Validated on our development ISO.