The baby villager zombie picks up a diamond sword and immediately discards it for an enchanted diamond sword which he drops also immediately. This cycle seems to go on forever, even on world reload. I first gave it an enchanted sword, then got killed by it, and it tried to pick up my normal diamond sword.
I uploaded a short video of it on Youtube:
http://www.youtube.com/watch?v=qPebZgAXW8g&feature=youtu.be