Tested that safestrings don't get escaped.

lib/handlebars.js

@@ -10,7 +10,11 @@ Handlebars = {
   },
 
   escape: function(string) {
-    if (string === null) {
+    // don't escape SafeStrings, since they're already safe
+    if (string instanceof Handlebars.SafeString) {
+      return string.toString();
+    }
+    else if (string === null) {
       string = "";
     }
 

test/handlebars.js

@@ -35,6 +35,13 @@ test("escaping", function() {
 
  shouldCompileTo("{{&awesome}}", {awesome: "&\"\\<>"}, '&\"\\<>',
         "expressions with {{& handlebars aren't escaped");
+
+});
+
+test("functions returning safestrings shouldn't be escaped", function() {
+  var hash = {awesome: function() { return new Handlebars.SafeString("&\"\\<>"); }};
+  shouldCompileTo("{{awesome}}", hash, '&\"\\<>', 
+      "functions returning safestrings aren't escaped");
 });
 
 test("functions", function() {