If you have Use remote files checked, you get original remote filenames. If you uncheck it, you get local escaped file names.
Bill_Fields
!& and "Filename Modification" Conflict with Custom Commands
When the "Replace" Filename modification is enabled in "Transfer settings", the files listed in !& do not match the temporary local filenames retrieved from the remote source.
Which causes any custom command that needs to work with these temp files to fail with "file not found" since the local temp filenames don't match the filenames listed in !&