Does transmitting break over FTDI chipset yield a binary 0 received on the receiving end?
Yes, this is expected behavior. Most UARTs will interpret the start of a "break" condition as an all-zero (null) byte that happens to have a framing error (no stop bit). Some (but not all) UARTs also have hardware detection of "break", but this typically kicks in only if the break condition extends for more than two whole character times (i.e., >20 bit times).

Traditionally, a hardware UART makes all bytes received available to the software; in other words, anything that can be interpreted as a start bit will cause a byte to be delivered to the software &mdash; along with status bits indicating possible parity and/or framing (stop bit) errors. It's up to the software to discard bytes that have errors, if that's the desired behavior.

I don't know about the FT232R specifically; it may be one of those UARTs that simply doesn't care about framing errors and has no way of signaling them to the USB host.