Maybe it has something to do with option settiings.  Mathew, can you try
with the following bash variables set to see if the problem appears for
you?  Also, BASH_VERSION='4.3.42(1)-release' pm wily, if that matters

BASH=/bin/bash
SHELL=/bin/bash
BASHOPTS=cdspell:checkwinsize:cmdhist:complete_fullquote:expand_aliases:extquote:force_fignore:histappend:histreedit:hostcomplete:huponexit:interactive_comments:progcomp:promptvars:shift_verbose:sourcepath
CDPATH=.:..:../..
HISTIGNORE='pwd:exit:fg:fg *:bg:bg *:l:history:cd:dist_my_setup*'
HISTSIZE=20000
IFS=$' \t\n'
LANG=en_US.UTF-8
LANGUAGE=en_US
OPTERR=1
OPTIND=1
SESSIONTYPE=gnome-session
SHELLOPTS=braceexpand:hashall:histexpand:history:interactive-comments:monitor:vi

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https://bugs.launchpad.net/bugs/890913

Title:
  Typing "prg $HOME/<tab>" expands to "prg \$HOME/"

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