pg_restore problem with 7.3.1

I am upgrading my PostgreSQL install from 7.2.3 to 7.3.1.  I ran into a
problem with pg_restore creating the database.  I am not sure if this is
a documentation problem or a real bug.  I have one database with BLOBs
and used tar format backup: "pg_dump -Ft -b mpmx > backup.tar".

I saw the -C option for pg_restore to create the database.  The man page
also says that with the -C option, the -d option specifies the database
create the database from

pg_restore -C -d template1 backup.tar

Instead of creating the mpmx database, the command loaded everything
into the template1 database.

Is the man page correct about the operation of the -C option?  Should I
have run things differently?  I noticed that without the -d option,
pg_restore spits out a script to restore the database.  Should I create
the database manually and restore it by piping pg_restore into psql?
How can I return template1 to its initial state?

  - Ian