Named Sets, AutoExists and Katmai

A couple of months ago Radim Hampel pointed out to me some very weird stuff happening with named sets and the Where clause. Since it turned out that Darren had run into the same issue and also been thrown by it, and since I tested it out on Katmai CTP6 and could see that it was behaving differently from AS2005, I opened an item on Connect:
https://connect.microsoft.com/SQLServer/feedback/ViewFeedback.aspx?FeedbackID=331186

And now, after a long and detailed email thread involving Mosha, Edward Melomed, Marius Dumitru, Darren and Deepak we've got to the stage where I understand what's going on, Katmai RC0 does roughly what I want, and I can blog about it!

Let me explain what I saw first. What would you expect the calculated member in following query to return?