It wont change anything except in a postbit.
As far as the [url=www.somesite]i like bob a lot[/bob] getting messed up... that is a limitation. Both safemode and danger mode will screw up that link.
The reason being that bob qualifies to get linked because there is a space in front of it.
There isnt really a way to determine (within reason) if bob is in middle of a link or not. All it can do is (in safe mode) determine that it isnt a link itself (ie www.bob.com). In order to determine if it is sitting in a url, you would have to come up with the mother of all regex that would find a match and scan backwards to ensure that there wasnt a < a href in front without a matching </a> after it. This would be a nightmare to make the regex and it would dramatically slow things down.
Sorry