Thanks for the response Adam. That's what I hoped you would say - that the tags should be collapsed by CE under normal circumstances and that this is some weird anomaly.
As far as I know there is no other explanation other than the customers are using CE to generate the bad tags (based on some usage pattern or conditions that I haven't been able to reproduce).
We'll upgrade our app at the first opportunity and let you know if we continue to see customers generating the bad HTML.