isHandlingData is set to true because of the error that was thrown. No one would kill the editor and then get the data but in my case this was a race condition. the blur event would get the data and sometimes the blur would happen after the html was destroyed. I force the issue here to facilitate the error.
After the error. all of the getData() and setData() calls don't update the iframe. It skips that part because of the initial error. You can test this by clicking the call to "set data on editor2" and "get the data on editor2".