The issue seems to be something with Joomla itself when the "Encrypt Login Form" setting is enabled. If you try with the mod_login module and enable that setting, you'll likely see the same results. Please test and let us know if that's the case.
We haven't fully investigated the cause yet, but have it on our task list to do so.
If your site is always loaded over https, you can safely leave the "Encrypt Login Form" setting disabled since the form will always be submitted over https anyways.
I hope that helps,
Alex