I can't reproduce the "Blockquotes galore" test article from http://themes.wordpress.net/testrun/. I enter the following code of a new article:
With some blockquotes too of course…
<blockquote>Lorem ipsum.</blockquote>
And a suggestion by Steve Cooley for a blockquote within a blockquote:
<blockquote>Lorem ipsum dolor.
<blockquote>This is a blockquote within a blockquote</blockquote>
Nulla in tellus eget odio sagittis blandit.</blockquote>
Maecenas at nisl.
and press "save and continue editing"; then WP changes my text to
With some blockquotes too of course…
<blockquote>Lorem ipsum.</blockquote>
And a suggestion by Steve Cooley for a blockquote within a blockquote:
<blockquote>Lorem ipsum dolor.</blockquote>
<blockquote>This is a blockquote within a blockquote</blockquote>
Nulla in tellus eget odio sagittis blandit.
Maecenas at nisl.
Note a </blockquote> that has been moved from the end of the quotation into its middle. I tested on a fresh WP 2.2 installatin, default theme, no plugins.