I think it's because MLO uses a lot of standard Windows function libraries (for example, you'll notice that the "Recurrence" pop-up window comes straight out of MS Outlook). There are other Windows apps which do the same thing when you type a letter to jump quickly to a task. I think the contacts search in Outlook works the way you want, Dan, so it may be possible for the MLO team to switch to a different library for their instant search function.
I've never really used the instant search function, specifically because I thought it doesn't let you type strings of letters at all. As for Joel and fhsn... I always stuck to Ctrl+F (and, sometimes, Ctrl+L).
Stéphane