Created attachment 87441 [details]
See attached test case. FF4 behaves the same way so this is likely a spec bug.
Crazy. That makes very little sense.
No, you're just in ScriptDataDoubleEscapedState. It's a comment inside of the script tag. I don't remember why we have all these escape states, but it's to model something.
tests16.dat (line 1498) has nearly this exact test case. I'm going to fire up the debugger and see what it is doing.
Amusingly, but bug is a victim of itself.
Filed spec bug http://www.w3.org/Bugs/Public/show_bug.cgi?id=12398
This is working as intended per http://www.w3.org/Bugs/Public/show_bug.cgi?id=12398