Links to URLS containing caret character are not recognised as links

From a support case:

When creating a link using the TinyMCE link editor, if you supply a link that has a caret symbol in the link, the link does not show up as a link.
Is there anything that can be done about this considering a large amount of links that come out of a content management system we are linking to have the ^ symbol in it.
Is there a plugin that might be able to help out with this or possibly a way to escape the character?

Suggested workaround: encode the caret as an XML character entity – i.e. http://www.example.com/bla^h