It works okay in Orgmode 4.47 and my build of Emacs (22.0.50).
This may be an XEmacs thing. I tried this out when I saw the original report and got the same behavior. I'm running XEmacs 21.4.19
(Cygwin). I did not have a #+BEGIN in the file at the time (which may be another factor).
Hope this helps, Ed -- Ed Hirgelt
Discovery consists of seeing what everybody has seen and thinking what nobody has thought.