spacing before list continuations

[John MacFarlane]

According to the official Markdown syntax documentation, "List items may
consist of multiple paragraphs. Each subsequent paragraph in a list item
must be intended by either 4 spaces or one tab."

But Markdown.pl (v. 1.0.2b7 & 1.0.1) seems to allow continuation
paragraphs that are indented fewer than 4 spaces.  So, for example,
given the following input

---------------------
1.  one

  continuation
---------------------

Markdown.pl produces:

---------------------
<ol>
<li><p>one</p>

<p>continuation</p></li>
</ol>
---------------------

Is this a bug, or should the documentated syntax be revised?  This more
relaxed behavior is nice in some cases, but it seems to cause problems
in others.  For example, this ought to be a nested list followed by a
horizontal rule:

---------------------
+   item 1

    +   item 2

  *   *   *   *   *
---------------------

But Markdown.pl produces this bizarre HTML:

---------------------
<ul>
<li><p>item 1</p>

<ul><li><p>item 2</p></li>
<li><ul><li><ul><li><ul><li>*</li></ul></li></ul></li></ul></li></ul></li>
</ul>
---------------------

Best,
John