Index: hs_taxonomy.module
===================================================================
--- hs_taxonomy.module	(revision 411)
+++ hs_taxonomy.module	(working copy)
@@ -515,7 +515,7 @@ function hs_taxonomy_hierarchical_select
  */
 function hs_taxonomy_hierarchical_select_create_item($label, $parent, $params) {
   $form_state['values'] = array(
-    'name'   => $label,
+    'name'   => html_entity_decode($label),
     'parent' => $parent,
     'vid'    => $params['vid'],
   );