Editor is broken using Panels IPE and other dialog situations

I'm not sure why yet, but for some reason the editor does not appear when it is used with Panels IPE (in-place-editor) -- instead it renders a blank white canvas with no editor. This is rendered instead:

<div class="form-textarea-wrapper resizable resizable-textarea"><textarea class="text-full form-textarea insert-processed" id="edit-field-custom-text-und-0-value" name="field_custom_text[und][0][value]" cols="60" rows="5" style="visibility: hidden;">&lt;p&gt;&lt;img alt="arts integration graphic" class="image-medium" src="/sites/default/files/styles/medium/public/images/textbox/AIGraphic_1.jpg?itok=zH8fDTSK" style="width: 361px; height: 442px;" title="Plainview Elgin Millville teachers develop response to what is arts integration" /&gt;&lt;/p&gt;
&lt;p&gt;&amp;nbsp;&lt;/p&gt;
&lt;p&gt;&amp;nbsp;&lt;/p&gt;
</textarea><div class="wysiwyg-toggle-wrapper"><a id="wysiwyg-toggle-edit-field-custom-text-und-0-value" href="javascript:void(0);" style="display: none;">Disable rich-text</a></div></div>

Editing that same fieldable panel pane via the FPP edit interface (with no IPE popup) and it works fine.