It's not strange. It has to do with the "state machine" behind authentication/authorization.
With the "login-page" auth, no on-page objects are requested because the browser is looking at the "please log in" page, not the actual page that was being requested. After the auth state is completed sucessfully, the credentials accepted by the server are then sent with another request for the "real page" and as that page is loaded, the credentials are also sent along with each request for the included on-page objects.
But with the "auth-in-URL" method, the initial page seen by the browser is the "real" page, and none of the included-object links on that "real page" contain the auth-string, and since the server has not yet accepted the auth, it sends a re-authorization request in response to each included-object request.
In order for the auth-in-URL method to work, all on-page links would have to include the username and password string. So you'd have to link to <img src="https://username:password@www.domain.com/logo.gif"> to allow the browser to successfully request and load the on-page logo graphic, for example.
Apparently, Chrome is detecting that you're trying to use the "auth-in-URL" method, and is modifying this into a standard login-page request somehow. Or it is prepending the auth-info from the requested page URL to the requested-object URLs -- likely specified as page- or server-relative links. However, this is not being done by the other browsers you're testing, accounting for the different test results you're seeing between browsers.
Because this auth-in-URL method is so insecure, I doubt that there will be much interest in supporting it within the browser development community. So if you continue to use it, then you may be stuck with a "Chrome-only" test environment -- or in this case, a Chrome-only "test-of-test" environment. :)
Jim
[edited by: jdMorgan at 3:25 pm (utc) on Oct 7, 2010]