Feel free to enter here the bugs you just found.
Diff algorithm
Very simple, needs a lot of improvement as it is far from only showing minimal differences.
html entities
See page TLA_HOWTO for a demonstration of the bug.
The 'less than' sign and 'greater than' sign do not get a proper html entity, thus the content in the textarea is not xhtml compliant.
i18n translation and admin panel
Seems like it provokes improper xhtml validity as well in admin panel.