BUG #7635: psql -1 and \connect

The following bug has been logged on the website:

Bug reference: 7635
Logged by: Marko Tiikkaja
Email address: pgmail(at)joh(dot)to
PostgreSQL version: 9.1.6
Operating system: OSX something
Description:

Hi,

With a simple script like this:

\connect postgres
CREATE TABLE foo();
ERROR_HERE;

You get output like this:

You are now connected to database "postgres" as user "postgres".
CREATE TABLE
psql:singletxn.sql:3: ERROR: syntax error at or near "ERROR_HERE"
LINE 1: ERROR_HERE;
^
psql:singletxn.sql:0: WARNING: there is no transaction in progress

Which isn't really what I expected :-(

I know it's not clear what to do with --single-transaction if a script is
\connecting to multiple databases in a single file, but IMHO it should at
least work correctly for the single database case.