The Dialer app should decode that into an #, it does so on my device. The flow log just displays it encoded, i'll fix that.
What # actually does or even work in the Dialer app, or mobile network, i don't know.
Android doesn't support sending DTMF tones, if that's what you expect the # to do, but i've heard some able to do it by including a comma in the phone number, e.g.: 123,#,4