Normally, repairing items with an anvil would increase the base cost by two exp levels. However, by renaming an item, that item no longer goes up in price from being repaired. Effectively, this allows enchanted items to be repaired any number of times for the same repair cost; and since the cost maximum is never breached, it is possible to continuously repair and maintain the same enchanted items for indeterminate amounts of time (presumably forever).
Note that this was tested with multiple items, repairs with both raw materials and with other tools, on unenchanted and enchanted items, and in creative and survival mode.
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Woah, wait, what? I've seen statements to the effect that anvils are supposed to give you more control over enchantments, and to allow you to extend the lifetime of a tool, but never make it last forever. The gradually increasing cost is supposed to force you to replace it eventually: https://twitter.com/Dinnerbone/status/259411094513266688
I would guess that by saying it's working as intended, you're referring to this: https://twitter.com/Dinnerbone/status/263034706084380672
But renaming is only supposed to provide a discount, extending the maximum lifetime of the item further, not make it so that the cost never increases.
Also, just found this comment here on the tracker by Dinnerbone, posted after the tweet about renaming providing a discount, verifying that it's still intended that:
Every time you repair a tool, it costs more to repair later.
We don't want the anvil to take away the need for crafting new tools and enchanting them; just postpone it.
It in fact appears that this has not yet been fixed as of version 1.5. I've updated the form as suggested.
Is this still a concern in the latest Minecraft version 14w08a? If so, please update the affected versions in order to best aid Mojang ensuring bugs are still valid in the latest releases/pre-releases.
I am pretty sure Dinnerbone stated this is intended behavior.