Paper-input inside paper-icon-item now not a permitting 'space'

[Kelly St. John]

I just posted a jsbin reproduction of this issue on stack overflow here:  http://stackoverflow.com/questions/32850390/paper-input-inside-paper-icon-item-not-permitting-space

But for quicker direct reference, here it is as well:  http://jsbin.com/herove/1/edit?html,output

Any ideas why that is the case?