+2  A: 

Invalid? Yes. A free ampersand inside HTML markup will result in a parser error.

Can modern browsers ignore the error and parse correctly? Most likely.

But it is malformed HTML.

Yuval A
Thanks for your reply. W3C's validator only gives a warning, though an error is issued for free angle brackets. It won't ruin my day, but all of this is highly inconsistent, wouldn't you say?Also, the word "should" instead of "must" in standards is sometimes considered an option.By the way, even good ol' lynx gets these (unambiguous) examples right.
You're dealing with HTML. Browsers practically invented the word "inconsistent" when it comes to dealing with HTML.
Yuval A