Uvision 3 Simulator SIGNAL function cannot set IE1

I've been trying to get IE1 set from a SIGNAL all day. It seems just plain broken. Please show me what I am doing wrong...

Here is a sample main built for Synopsys DW8051, default New Project settings.

IDE-Version:
µVision3 V3.80
Copyright (c) Keil Elektronik GmbH / Keil Software, Inc. 1995 - 2009

Tool Version Numbers:
Toolchain: PK51 Prof. Developers Kit Version: 8.18
Toolchain Path: C:\Keil3\C51\BIN\
C Compiler: C51.Exe V8.18
Assembler: AX51.Exe V3.06h
Linker/Locator: LX51.Exe V4.39
Librarian: LIBX51.Exe V4.24
Hex Converter: OHX51.Exe V1.36e
CPU DLL: S8051.DLL V3.65
Dialog DLL: DCore51.DLL V2.68

----------------------------- main.c -----------------------

#include <REGDW.H>

volatile unsigned char pdata toggle;

void main ( void ) {
  unsigned char temp;
  toggle = 0;

  ET1 = 1; // Enable timer 1 interrupt
  EX1 = 1; // Enable ext 1 interrupt
  EA  = 1;  // Global interrupt enable

  while (1) {
    if (toggle >= 2) {
      toggle = 0; // <<< Never reached
    } else if (toggle == 1) {
      toggle--;
    }
    temp++;
    temp++;
    temp++; // Waste time
  }
}

void timer1Interrupt (void) interrupt 3 using 3 {
  toggle |= 1;
}

void ext1Interrupt (void) interrupt 2 using 2 {
  toggle |= 2;
}


----------------------------- IE1.ini -----------------------


SIGNAL void timerHandler () {
  printf("Starting ad hoc timer\n");
  while (1) {
    // Period = 100ms
    swatch (0.1);
    printf("Firing TF1\n");
    TF1 = 1;
  }
}


SIGNAL void ei1Handler () {
  printf("Starting ad hoc external event 1\n");
  while (1) {
    // Period = 40ms
    swatch (0.04);
    printf("Firing IE1\n");
    IE1 = 1;
  }
}

timerHandler();
ei1Handler();


----------------------------- Command Output -----------------------
...
timerHandler();
Starting ad hoc timer
ei1Handler();
Starting ad hoc external event 1

LA 'toggle
Firing IE1
Firing IE1
Firing TF1
Firing IE1
Firing IE1
...

But a breakpoint on the second "toggle = 0" never fires. I've proven to myself many ways that this should work. But it does not. If I click on IE1 in the Interrupt window it does work.

Why can't I set IE1 from a SIGNAL function?