Gingerbread on DX:
Looks like Swype's got issues dealing with selected words.
Select a word (tap once, long press, choose Select Word from the menu), then try replacing the text by swyping something else.
Rather than replacing the selected text, the new text gets appended to the text you want to replace, no spaces in between.
This happens across multiple apps (texting, gmail, search box, Note Everything, etc.).
Don't know that Swype has ever issued an update to a preinstalled copy.
Ooops.
Mike