I agree that it should show the search term in context, and it does. But I'm not sure I'm understanding the behavior Tom is describing.
From my test this morning, it finds and highlights the first occurrence of the search term, and it also highlights any occurrences after the first one *that occur within that particular context* (which consists of about a line and a half). It does not return any occurrences beyond that first context.
So if a message contains the term a couple of times in lines 4-5, say, and then a couple more times in lines 8, 10, 11, or whatever, the snippet shows only the occurrences in lines 4-5.
You can see this by doing a search in beta on the word "search," which has been used many times in the current thread.
Messages are the sole opinion of the author, especially the fishy ones.