Deleting a term causes error when viewing entity that had been using that term

If an entity use a term reference field, and you later delete a taxonomy term in use by a specific entity, text formatter chokes when trying to resolve the term. (Unfortunately, deleting a term doesn't remove the term references in the relevant fields tables - core bug: http://drupal.org/node/1281114 )

A quick glance lline 480 (where the reported error occurs) leads me to believe that the else statement on line 479 can be changed to:

elseif (isset($terms[$item['tid']]->name)) {

Thoughts?