Bug 355505: nested inline element with vertical padding does not stretch, grow vertically parent's inline height

Actual (live) results:

This is the first inline element and this the second inline element, nested inside the first one.

This is an inline element with an image inside of it.

There are no anonymous inline boxes within the above 2 <p>.

Legend:
blue border is block-level <p>
green border is a <span>, first child of parent <p>
red border is child, nested inline child of green border