So if I'm understanding correctly, this means that:

** two

*** three

Will render as: "<p><strong> two </strong>* three</p>"

Not: "<ul><li><ul><li>two<ul><li>three</li></ul></li></ul></li></ul>"

(as MediaWiki currently does) ?

I would say it would render as:

<p> <strong> two<br /> </strong>* three </p>

We do however only **recommend** HTML. We give freedom to the wiki developer to decide which HTML s/he wishes to use as output.

Chuck