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From what I've seen and tested Google will consider %20 to be the same as space character. Moreover it will convert spaces in URL to %20 in SERP. According to RFCs URL should not contain spaces or any other characters that may be incorrectly interpreted (for example <.> but there are others). Such characters should be represented as '%' followed by hex code of the character (20 in case of space).

I personally would change the form into a HREF - this would reduce page-size on the form-elements by 50% (i.e. 40 x 195 bytes). i.e.  I have not found that the amount of links on a page drastically affects link authority of other links (typically your important links would be structured above the product listing anyway)