Ahh. Yes, your theme is to blame for this one, and it's not really doing anything that bizarre. It looks like the theme is trying to populate the "Title" attribute of the anchor tag and is choking on the nested HTML. Two possible solutions to that:
First, somewhere you probably have a line like this:
<a href="<?php the_permalink() ?>" rel="bookmark" title="Link to <?php the_title(); ?>"><?php the_title(); ?></a>
This is a bug in the theme. The title attribute should be using, not surprisingly, the_title_attribute(), which strips HTML and encodes quotes.
So something like this, instead:
<a href="<?php the_permalink() ?>" rel="bookmark" title="Link to <?php the_title_attribute(); ?>"><?php the_title(); ?></a>
Let me know if that solves your problem. (This code might appear on any number of pages within your theme)