bwt, Version 0.2$ is used as the sentinel character. For an excellent introduction to the Burrows-Wheeler Transform see Adjeroh, D., Bell, T. and Mukherjee, A. (2008). The Burrows-Wheeler Transform; Data Compression, Suffix Arrays, and Pattern matching, Springer.
bwt illustrates some of the material presented in their chapter 2. In the documentation encosed with the stand-alone version of bwt I also explain a bit about the Burrows-Wheeler Transform.