>>Yes, excellent memory! Now to troll the bugfix list for SP2 to see if it's been fixed ...
>>
>It was not - at least it's not mentioned in the list of fixes.

For lurkers, the list is at http://www.microsoft.com/downloadS/details.aspx?FamilyID=a28ddec6-ba3c-49d0-8176-8c0b3fca06d1&displaylang=en

While TEXTMERGE is not mentioned, TRY...CATCH is mentioned once near the beginning. I suspect the problem actually is with TRY...CATCH. Maybe that fix also fixed this issue... I'll put together some repro code so someone with SP2 can test it.