Unexpected behavior, but my own tests are confirming it as well. I simplified it down to running through a FontString, which would be where the processing happens, stripping the overhead of the Tooltip code.
Lua Code:
local ProcessLocalizedString; do-- Package persistent FontString object into function prototype's scope
local ConverterFontString=UIParent:CreateFontString(nil,"BACKGROUND","GameFontNormal");
function ProcessLocalizedString(text)
ConverterFontString:SetText(text);
return ConverterFontString:GetText();
end
end