diff --git a/lib/ansible/playbook.py b/lib/ansible/playbook.py
index 0eb0e4d685..c75d27213f 100755
--- a/lib/ansible/playbook.py
+++ b/lib/ansible/playbook.py
@@ -436,24 +436,17 @@ class PlayBook(object):
         else:
             self.callbacks.on_setup_primary()
 
-        # first run the setup task on every node, which gets the variables
-        # written to the JSON file and will also bubble facts back up via
-        # magic in Runner()
-        push_var_str=''
-        for (k,v) in vars.iteritems():
-            push_var_str += "%s=\"%s\" " % (k,v)
-
         host_list = [ h for h in self.host_list if not (h in self.stats.failures or h in self.stats.dark) ]
 
         # push any variables down to the system
         setup_results = ansible.runner.Runner(
             pattern=pattern, groups=self.groups, module_name='setup',
-            module_args=push_var_str, host_list=host_list,
+            module_args=vars, host_list=host_list,
             forks=self.forks, module_path=self.module_path,
             timeout=self.timeout, remote_user=user,
             remote_pass=self.remote_pass, remote_port=self.remote_port,
             setup_cache=SETUP_CACHE,
-            callbacks=self.runner_callbacks, sudo=sudo,
+            callbacks=self.runner_callbacks, sudo=sudo, debug=self.debug,
         ).run()
         self.stats.compute(setup_results, setup=True)
 
diff --git a/lib/ansible/runner.py b/lib/ansible/runner.py
index b2cf3518b9..ad7574452b 100755
--- a/lib/ansible/runner.py
+++ b/lib/ansible/runner.py
@@ -113,8 +113,8 @@ class Runner(object):
         self.basedir     = basedir
         self.sudo        = sudo
 
-        if type(self.module_args) != str:
-            raise Exception("module_args must be a string: %s" % self.module_args)
+        if type(self.module_args) != str and type(self.module_args) != dict:
+            raise Exception("module_args must be a string or dict: %s" % self.module_args)
 
         self._tmp_paths  = {}
         random.seed()
@@ -271,6 +271,9 @@ class Runner(object):
     def _transfer_str(self, conn, tmp, name, args_str):
         ''' transfer arguments as a single file to be fed to the module. '''
 
+        if type(args_str) == dict:
+            args_str = utils.smjson(args_str)
+
         args_fd, args_file = tempfile.mkstemp()
         args_fo = os.fdopen(args_fd, 'w')
         args_fo.write(args_str)
@@ -316,23 +319,43 @@ class Runner(object):
     def _add_setup_vars(self, inject, args):
         ''' setup module variables need special handling '''
 
+        is_dict = False
+        if type(args) == dict:
+            is_dict = True
+
+        # TODO: keep this as a dict through the whole path to simplify this code
         for (k,v) in inject.iteritems():
             if not k.startswith('facter_') and not k.startswith('ohai_'):
-                if str(v).find(" ") != -1:
-                    v = "\"%s\"" % v
-                args += " %s=%s" % (k, str(v).replace(" ","~~~"))
+                if not is_dict:
+                    if str(v).find(" ") != -1:
+                        v = "\"%s\"" % v
+                    args += " %s=%s" % (k, str(v).replace(" ","~~~"))
+                else:
+                    args[k]=v
         return args   
  
     # *****************************************************
 
     def _add_setup_metadata(self, args):
         ''' automatically determine where to store variables for the setup module '''
+        
+        is_dict = False
+        if type(args) == dict:
+            is_dict = True
 
-        if args.find("metadata=") == -1:
-            if self.remote_user == 'root':
-                args = "%s metadata=/etc/ansible/setup" % args
-            else:
-                args = "%s metadata=/home/%s/.ansible/setup" % (args, self.remote_user)
+        # TODO: keep this as a dict through the whole path to simplify this code
+        if not is_dict:
+            if args.find("metadata=") == -1:
+                if self.remote_user == 'root':
+                    args = "%s metadata=/etc/ansible/setup" % args
+                else:
+                    args = "%s metadata=/home/%s/.ansible/setup" % (args, self.remote_user)
+        else:
+            if not 'metadata' in args:
+                if self.remote_user == 'root':
+                    args['metadata'] = '/etc/ansible/setup'
+                else:
+                    args['metadata'] = "/home/%s/.ansible/setup" % (self.remote_user)
         return args   
  
     # *****************************************************
@@ -352,9 +375,11 @@ class Runner(object):
             args = self._add_setup_vars(inject, args)
             args = self._add_setup_metadata(args)
 
+        if type(args) == dict:
+           args = utils.bigjson(args)
         args = utils.template(args, inject)
+
         module_name_tail = remote_module_path.split("/")[-1]
-        client_executed_str = "%s %s" % (module_name_tail, args.strip())
 
         argsfile = self._transfer_str(conn, tmp, 'arguments', args)
         if async_jid is None:
@@ -368,6 +393,7 @@ class Runner(object):
 
                     
         res, err = self._exec_command(conn, cmd, tmp, sudoable=True)
+        client_executed_str = "%s %s" % (module_name_tail, args.strip())
         return ( res, err, client_executed_str )
 
     # *****************************************************
diff --git a/library/setup b/library/setup
index a2b90b7400..6efb5e973c 100755
--- a/library/setup
+++ b/library/setup
@@ -23,6 +23,7 @@ import sys
 import os
 import shlex
 import subprocess
+import traceback
 
 try:
     import json
@@ -34,18 +35,22 @@ except ImportError:
 if len(sys.argv) == 1:
     sys.exit(1)
 
+
 argfile = sys.argv[1]
 if not os.path.exists(argfile):
     sys.exit(1)
 
-input_data = shlex.split(open(argfile, 'r').read())
+setup_options = open(argfile).read().strip()
+try:
+   setup_options = json.loads(setup_options)
+except:
+   list_options = shlex.split(setup_options)
+   setup_options = {}
+   for opt in list_options:
+       (k,v) = opt.split("=")
+       setup_options[k]=v   
 
-# turn urlencoded k=v string (space delimited) to regular k=v directionary
-splitted = [x.split('=',1) for x in input_data ]
-splitted = [ (x[0], x[1].replace("~~~"," ")) for x in splitted ]
-new_options = dict(splitted)
-
-ansible_file = new_options.get('metadata', DEFAULT_ANSIBLE_SETUP)
+ansible_file = setup_options.get('metadata', DEFAULT_ANSIBLE_SETUP)
 ansible_dir = os.path.dirname(ansible_file)
 
 # create the config dir if it doesn't exist
@@ -74,7 +79,7 @@ if os.path.exists("/usr/bin/facter"):
        facter = False
    if facter:
        for (k,v) in facter_ds.items():
-           new_options["facter_%s" % k] = v
+           setup_options["facter_%s" % k] = v
 
 # ditto for ohai, but just top level string keys
 # because it contains a lot of nested stuff we can't use for
@@ -93,13 +98,13 @@ if os.path.exists("/usr/bin/ohai"):
        for (k,v) in ohai_ds.items():
            if type(v) == str or type(v) == unicode:
                k2 = "ohai_%s" % k
-               new_options[k2] = v
+               setup_options[k2] = v
 
 # write the template/settings file using
 # instructions from server
 
 f = open(ansible_file, "w+")
-reformat = json.dumps(new_options, sort_keys=True, indent=4)
+reformat = json.dumps(setup_options, sort_keys=True, indent=4)
 f.write(reformat)
 f.close()
 
@@ -108,9 +113,9 @@ md5sum2 = os.popen("md5sum %s" % ansible_file).read().split()[0]
 if md5sum != md5sum2:
    changed = True
 
-new_options['written'] = ansible_file
-new_options['changed'] = changed
-new_options['md5sum']  = md5sum2 
+setup_options['written'] = ansible_file
+setup_options['changed'] = changed
+setup_options['md5sum']  = md5sum2 
 
-print json.dumps(new_options)
+print json.dumps(setup_options)
 
diff --git a/test/playbook1.events b/test/playbook1.events
index b8ab78e634..e5e9cd489b 100644
--- a/test/playbook1.events
+++ b/test/playbook1.events
@@ -15,7 +15,7 @@
                     "answer": "Wuh, I think so, Brain, but if we didn't have ears, we'd look like weasels.", 
                     "changed": true, 
                     "metadata": "/etc/ansible/setup", 
-                    "port": "5150", 
+                    "port": 5150, 
                     "written": "/etc/ansible/setup"
                 }
             ]
@@ -44,7 +44,7 @@
                     "cow": "moo", 
                     "duck": "quack", 
                     "metadata": "/etc/ansible/setup", 
-                    "port": "5150", 
+                    "port": 5150, 
                     "testing": "default", 
                     "written": "/etc/ansible/setup"
                 }
@@ -228,6 +228,21 @@
                 "127.0.0.2"
             ]
         ], 
+        [
+            "ok", 
+            [
+                "127.0.0.2", 
+                {
+                    "started": 1
+                }
+            ]
+        ], 
+        [
+            "async poll", 
+            [
+                "127.0.0.2"
+            ]
+        ], 
         [
             "ok", 
             [