Index: wp-admin/js/categories.dev.js
===================================================================
--- wp-admin/js/categories.dev.js	(revision 12212)
+++ wp-admin/js/categories.dev.js	(working copy)
@@ -6,7 +6,7 @@
 	addAfter = function( r, settings ) {
 		var name, id;
 
-		name = $("<span>" + $('name', r).text() + "</span>").html();
+		name = $("<span>" + $('name', r).text() + "</span>").text();
 		id = $('cat', r).attr('id');
 		options[options.length] = new Option(name, id);
 	}