pgsql-bugs(at)postgresql(dot)org writes:
> When overwriting an lo with a larger lo, the old data is not overwritten. This was supposed to be fixed in 6.5, but it happens in 7.0.3.
Please try your test case in 7.1beta3 or later. The large-object
support has been rather completely rewritten ... if this bug is
still there, then we need to know about it.
regards, tom lane