BUG #6774: FOR IN SELECT LOOP ignores ORDER BY

The following bug has been logged on the website:

Bug reference: 6774
Logged by: Boris Folgmann
Email address: boris(at)folgmann(dot)de
PostgreSQL version: 8.4.12
Operating system: CentOS 6.3
Description:

This is an really interesting one!
I've trimmed down the problem so you can simply reproduce it by copy &
paste:

CREATE OR REPLACE FUNCTION ignores_order_by()
RETURNS TABLE(datname VARCHAR) AS $$
DECLARE
r RECORD;
BEGIN
FOR r IN SELECT * FROM pg_database WHERE datallowconn ORDER BY
datname
LOOP
datname := r.datname;
RETURN NEXT;
END LOOP;
END;
$$ LANGUAGE 'plpgsql';

CREATE OR REPLACE FUNCTION respects_order_by()
RETURNS TABLE(dn VARCHAR) AS $$
DECLARE
r RECORD;
BEGIN
FOR r IN SELECT * FROM pg_database WHERE datallowconn ORDER BY
datname
LOOP
dn := r.datname;
RETURN NEXT;
END LOOP;
END;
$$ LANGUAGE 'plpgsql';

SELECT * from ignores_order_by();
SELECT * from respects_order_by();

Now compare the different output!
The only difference of the two functions is that the first one uses a
variable with the same name of a column.
This might be a feature and not a bug, but browsing through the
documentation I could not find any documented restrictions on variable names
in this context.