I can't reproduce this. I just tried typing names with space in them and they worked fine. It did not toggle the pause state.
In the code, we decide if the report control wants the space. If you've started typed navigation, it says that it does.
Obviously the search can not start with a space, but as long as you start with a letter and then a space, it should be fine (assuming you type reasonably quickly).
Maybe try again with the latest build?
