Url Rewrite ASP.NET 2.0 and HttpUnhandledException

I was really surprised to discover this bug a couple of days back while working on an ASP.Net 2.0 web site. I spent several hours barking up the wrong code tree since I was convinced it had to do with some recent code changes I made. But as it turns out this problem is as old as the server itself and for some reason has not been fixed by any .Net patches.