Alright, got another one.  If you are using the Send Email action and try to use a Email Template with merge tags (e.g. {title}) the tags in the body will not merged, they will be rendered just as you typed them.  What's strange is that merge tags in the subject DO merge!

If you use the "Custom" option in the Content section of the SendEmail Action the merge tags DO work.  Tags using the dot notation to indicate joined records do not work however (e.g. {old.title}) will render '' nothing when merged.

To recap: You can use a template with merge tags in the subject only, body tags aren't merged.  Subject and Body content defined in the SendEmail Action record ARE merged, but only the current record's fields (i.e. no joined records)