Firefox 22 on Mac, Ctrl-Alt-Q on selected text, then select "code", inserts tag, overwrites selection
I couldn't replicate this using Firefox 21, Chrome 27 or the latest nightly build of Firefox 22 on F18. Can you give a specific example of how to replicate it, ie what you are highlighting, have you tried other browsers or does it happen every time (ie might be a problem on Mac only)? Also given Firefox 21 is the latest stable version, it's possible that it could be a Firefox bug if it works on other browsers.
Closing this as it's been a bit over a week now and there has been no response. If it happens again please re-open the bug with additional details. Also if it does occur again try refreshing your cache to be sure it's not a caching issue.