I've confirmed this is a Jetty bug related to international chars (>=128) and their output writer. When I moved the example to Tomcat 5.5, everything worked as expected.
For the exact same Lucene index file, Tomcat outputs <str>I¹ll <email></str> and Jetty outputs <str>I¹ll <email><email></str> We should really look into switching the appserver we bundle for the example. -Yonik