What I expected to happen was...:
Mining obsidian while partially underwater, but still able to breathe. Obsidian should disappear, water should fill in block (or react with lava to make a stone block), mined obsidian should appear.

What actually happened was...:
Successfully mined obsidian, block temporarily disappears (usually showing some lava behind it), block re-appears??? You can step back 2 spaces and it will disappear as expected. If you don't you can not walk into it and can even start to re-mine the block. After about 10 seconds you'r health will start taking hits as if you've been under water too long or are getting hit by lava.

Steps to Reproduce:
1. Make it so you have some shallow water over the blocks of obsidian you want to mine (can't be more than half or two-thirds deep).
2. Mine a block of obsidian and drop down into the hole you created (you should be half to two-thirds under water but still able to breathe).
3. Mine the adjacent block (this is where I get the bug).