Works in Chrome Version 29.0.1547.66 m

This issue was fixed in Chromium Revision 152753 (http://src.chromium.org/viewvc/blink?view=revision&revision=152753).
The jsfiddle from the original bug report: http://jsfiddle.net/sPR4t/
Merge pull request #364 from vexabyte/patch-1

contenteditable now works when nested inside a draggable element