Search and replace broken?

Example:  

1) Search for: "abc" replace with : "xyz".  

2) Search for "def", replace with "" (empty).  

3) Repeat the search-and-replace (hit replace again)

It will hit the first instance of def, replace it with empty characters (delete it), and then the second and subsequent matches will be replaced with "xyz" (from the previous search and replace).  It also doesn't re-fill the "replace" input field with "xyz" until you click on it, so it looks like it should be working.