I just tried it again using FireFox 3.5.2 this time and I definitely see a problem.
If you select some text, them click the 'Font Color' button it works as expected. The problem occurs if you click the little down-arrow beside 'Font Color' and choose a color. When you do that, more text than you selected gets altered.
For example, right now I am going to select the word 'expected' in the previous paragraph and change it to green. Let's see what happens...
yes - the unselected rest of the paragraph turned green too...
I hope you can reproduce this and even maybe fix it!
-dr3d