Difference in bash output redirections behavior

I am trying to understand the reason behind the difference in redirections of bash output. Here are two approaches: 1) Redirection of the output to named pipe: /bin/bash -i 2>&1 1>/tmp/fifo 2) Redirection using unnamed pipe to another script reading from stdin: /bin/bash -i 2>&1 | ./reader.sh _reader.sh_ is supposed to read line by line from stdin:

while read LINE; do
   echo ${LINE}    # do something with it here
done
exit 0

The question is: Why when redirecting to fifo (approach#1) the prompt information (username@host: $) is not redirected, but when redirecting to another program/script (approach#2), it does?