I wanted to know if using dashes (or any other allowed character) is just because the whitespace encoding (%20) make urls less legible. I don’t see any technical reason for this, but there might be something that I don’t remember or don’t know about.
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I believe that it’s primarily due to user preference. As long as all the components handle the encoding properly, it should make no technical difference.
Here is an interesting writeup on it: http://www.codinghorror.com/blog/2006/04/of-spaces-underscores-and-dashes.html
His point about preferring a dash over an underscore is valid though, as most search engines treat a dash as a word-breaker, but an underscore is not so it’s treated as a single word. Therefore, that is a valid technical reason for a dash to be used instead of an underscore to replace spaces… but there’s no technical requirement that I know of to use dashes over spaces in the URL itself.