It's particularly noxious as there is no way to parse it in any reasonable fashion. Four apostrophes is always apostrophe+bold (parseable), except that this rule means that if at the end of the paragraph you encounter other unclosed italics and bold, you have to go back to the start and convert one of these new "apostrophe+bold" sequences into "apostrophe+apostrophe+italics" (nightmare).
Would it help to change the definition of "single letter word" to not include a single apostrophe? It would just be a small change to one line of code and can be made straight away (rather than waiting for the new parser), as far as I can tell, and would fix at least one of the problems. Someone still needs to be done about the feature in the long term, but in the short term, I see no reason for an apostrophe counting as a word.