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build i0506-0200 - I clicked on several Core projects - chose the "release" action - it said that there were several workspace changes that would not be included in the tagged project - hit OK - the resulting compare browser looks like it was comparing my workspace file to the released version I would expect it to compare the latest in HEAD against the released revision.
Note that at the end of the release I was prompted with a dialog showing me the differences between my workspace and the released version. The initial Compare was still confusing though.
It doesn't compare what is in HEAD. It compares what is in your local workspace. Usually, a user has HEAD or some other branch loaded without any local changes. It should be possible to modify the compare to ignore local changes.
With the move to Git, this tool isn't in active use anymore for anything other than copyright updates. I'm going to close this bug as we have no plans to address it.