There were two problems here:

1) \plain reset the character properties, but did not touch the current encoding
2) the default properties were not passed to substreams

There is no reason for this separation to exist.

It looks like this one is also meant to be called manually or something,
and the original version didn't skip the first argument either.

Daniel Bankston is right, the call probably meant to check whether
the intersection is not empty, as an optimization.