When the nether is loaded with the snapshot server jar only the chunk you're in get loaded correctly.. everything else is random blocks until a block update is performed.
The nether loads fine is you change jar to 1.4.5
MC-4375
Nether Corruption
Resolved
Duplicate
0
Wooly Creeper
(Unassigned)
Unconfirmed
nether
Snapshot 12w49a
Retrieved
Duplicate of MC-4200 , please use the search function to see if your bug has already been submitted. Currently over 30% of tickets are being closed as duplicate.