@MarcelW thank you for your effort and the suggestions. I think they put me on the right track with actually studying the error message and thinking about waht is going on.
It was the progress bar in H2O that would use characters that the KNIME/Windows console would not like and would refuse to fix using you suggestions. In the end I just introduced:
h2o.no_progress()
So no more progress bars inside the wrapper (which would not be of any real help) and now it does work. Still might be a point for KNIME or H2O to see that these progress bars with their (block ?) characters would not interfer with scripts from within KNIME.
I will mark this as solved when I have done some more tests.