I discovered that the lines ( the body of a headline):
*** real headline
cause agenda processing to fail. It tries to parse <times> as a
timestamp. The parser used by agenda appears not to enforce the
requirement that headlines begin with asterisks on the left margin.
Removing either the leading colon or the asterisk on example fixes the
Regular display parsing does not get confused. The highlighting and
font changes do not consider the " * example" to be a headline.