moby: TTY Output Regression

Description

When using a recent master build including https://github.com/moby/moby/pull/33007 (to help kick the tires on the updated console-handling code), TTY output comes out garbled (presumably due to the lack of \r):

$ ./docker -H tcp://docker:2375 run -it --rm bash
bash-4.4# echo hi
                 hi
                   bash-4.4# 

Steps to reproduce the issue:

1. create a master build (builds from https://master.dockerproject.org appear to be broken since https://github.com/moby/moby/pull/32694 was merged)
2. launch dockerd
3. run a container with an interactive shell and then invoke a command or two

Describe the results you received:

Cascading output!

Describe the results you expected:

Output aligned on the left margin, as in previous releases.

Output of docker version:

$ ./docker -H tcp://docker:2375 version
Client:
 Version:      library-import
 API version:  1.30
 Go version:   go1.8.1
 Git commit:   library-import
 Built:        library-import
 OS/Arch:      linux/amd64

Server:
 Version:      17.06.0-dev
 API version:  1.30 (minimum version 1.12)
 Go version:   go1.8.1
 Git commit:   4b846a1
 Built:        Tue May  9 05:00:50 2017
 OS/Arch:      linux/amd64
 Experimental: false

Output of docker info:

$ ./docker -H tcp://docker:2375 info
Containers: 0
 Running: 0
 Paused: 0
 Stopped: 0
Images: 1
Server Version: 17.06.0-dev
Storage Driver: vfs
Logging Driver: json-file
Cgroup Driver: cgroupfs
Plugins: 
 Volume: local
 Network: bridge host macvlan null overlay
 Log: awslogs fluentd gcplogs gelf journald json-file logentries splunk syslog
Swarm: inactive
Runtimes: runc
Default Runtime: runc
Init Binary: docker-init
containerd version: d24f39e203aa6be4944f06dd0fe38a618a36c764
runc version: 992a5be178a62e026f4069f443c6164912adbf09
init version: 949e6fa
Security Options:
 seccomp
  Profile: default
Kernel Version: 4.4.63-gentoo
Operating System: Alpine Linux v3.5 (containerized)
OSType: linux
Architecture: x86_64
CPUs: 8
Total Memory: 31.4GiB
Name: 33784326e3d3
ID: QKJH:XFQL:UCOR:56QQ:RZES:4YEQ:625G:3RQF:BAJJ:3TUW:Z4IE:GKE6
Docker Root Dir: /var/lib/docker
Debug Mode (client): false
Debug Mode (server): false
Username: tianon
Registry: https://index.docker.io/v1/
Experimental: false
Insecure Registries:
 127.0.0.0/8
Live Restore Enabled: false

WARNING: bridge-nf-call-iptables is disabled
WARNING: bridge-nf-call-ip6tables is disabled

Additional environment details (AWS, VirtualBox, physical, etc.):

I’m running the daemon via Docker-in-Docker, but my client is running directly on the host (connecting via TCP). I also tried running my host’s Docker client (17.04.0-ce) against the master daemon and got the same results.

Edit: I’ve reproduced on both 4.4.63-gentoo and 4.9.0-2-amd64 (from Debian).

cc @crosbymichael @cyphar