If the player is still being told to track an entity's location on a server, but that entity goes beyond the player's chunk view distance, the entity then does not exist to the player. If that entity is a player or a mob, they cannot hit or see the entity until the entity is teleported.
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Sorry about the music, forgot to mute it.

I'm not sure it is the same bug, I could not duplicate it in any of the 1.7 clients. And going through some of the details of the other issue, they're not exactly the same.