SOLUTION!
This issue seems to happen only if WP is installed in the root of the site. Just install it into a subdirectory, and all is well. 🙂
I’m getting the exact same thing in WP 2.7.1. I think the URL string is getting munged somewhere before it’s passed to PHP’s parse_url function. I’ve traced it back to class.wp-styles.php line 41. I don’t have time to monkey with it further. I hope this gets fixed.
What exactly is one supposed to see in the way of editing tools? I’m trying the demo site, and I see two tabs – Visual and Code – but I see no editing tools. I’ve tried both Safari and Firefox on my Mac.
Hmmm, perhaps I should see tools like the ones I’m seeing here as I edit this reply? Maybe the demo site is out of date?