After failing to receive and answer in the newsgroups and forums, for my nested repeater performance issue, I contacted ScottGu directly.  He didn’t seem sure of what was happening either, so he forwarded the info to a co-worker.  Polita answered:

“The repeater calls databind on all its item children in the
ItemDataBound event. So the inner repeater is databound once by the
outer databound, and once by you in your Outer_ItemCreated event
handler. To make the inner repeater bind just once, remove the call to
DataBind in Outer_ItemCreated.”

So, it’s not a bug on the asp.net side of things… just in the way fuzzy logic flows through my brain.  Either way, knowing this isn’t a bug and is easily remedied is a nice feeling… Thanks Scott and Polita for clearing this up!