Sweet

I'm glad that one got solved
I think the Hash mark is really dependent on what you're doing (the program you're using). When I first tried to replicate your results, I foolishly did this:
cat FILE <<EOF >OUTPUT
hi
there # how are ya
EOF
host # cat OUTPUT
hi
there # how are ya
host #
and that worked okay, so I initially dismissed it. It came to mind later because I found I had a problem with comments in an old script where I was doing "ftp" instead of "cat"
Anyway, great news
, Mike
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