Comment 3 for bug 495023

It removes them from version control but leaves them in the working tree. It's as if you did "bzr remove --keep <some random dir>". (Or, as if bzr thought a directory was missing on disk when it wasn't and therefore it decided to remove it during the commit.)

It can be reproduced by doing a commit that doesn't (shouldn't) change anything, as in the original description.

I've also managed to reproduce it on my OS X machine now as well. The two important factors are that:
1. The branch has a lot of files and directories in it (e.g. 10000 files, 1000 dirs). I reproduced it by putting 10 copies of the bzr source into the same branch.
2. You need to interrupt it at the correct time. This is sometime after it says "Committing to:", but *before* it displays the progress bar. If you try this a few times you'll see the message about "KeyboardInterrupt in 'bzrlib._dirstate_helpers_pyx". Repeat a few more times and eventually you'll see it remove a directory of files.