Did you choose a completion (from several alternatives) from the *Completions* buffer, by <Enter> or clicking on it?
Yes.
OK. As I mentioned in my original post, Emacs [GNU emacs] `choose-completion' (choosing a completion from the Completions buffer) always replaces text upto (point). The code unambiguous-completion-length moves the point to a different location, and can move it to a lower position. If the point is moved to a lower location, the text SHOULD get garbled.
So if the choose-completion function is invoked, and succeeds, it will fail garble text as per the specification of emacs completion functions. If the text properties are set to disable modification, then choose-completion will fail. Eitherway the behaviour is incorrect. (This is all to the best of my knowledge/ Emacs 21, 22/ and CMUCL if that matters)
I'm still surprised that it (the posted test case) works for you. -- Best Regards Madhu