sqlplus, command line parameters and ORACLE_HOME with spaces
sqlplus and many other programs do not require ORACLE_HOME to be set.

In this documentation 9.2 Oracle states:


  Oracle Corporation recommends that you never set the ORACLE_HOME
  environment variable, because it is not required for Oracle products
  to function properly. If you set the ORACLE_HOME environment variable,
  then Oracle Universal Installer will unset it for you.


I did not find similar statement for never releases of Oracle, so it might be outdated. Newer installation guides for Windows do not mention ORACLE_HOME environment variable at all, so most likely it is really not needed.