#theme in fieldset themes contents, not the fieldset

Take the following example:

function mymodule_example_form(&$form_state) {
  $form = array();
  $form['outer'] = array(
    '#type' => 'fieldset',
    '#title' => t('my fieldset'),
    '#collapsible' => TRUE,
    '#theme' => 'mymodule_fieldset',
  );
  $form['outer']['content'] = array(
    '#value' => '<div>hello</div>',
  );
  return $form;
}
// Theme function - so far this is a cut-and-paste of the system theme function in form.inc
function theme_mymodule_fieldset($element) {
  if ($element['#collapsible']) {
    drupal_add_js('misc/collapse.js');
    if (!isset($element['#attributes']['class'])) {
      $element['#attributes']['class'] = '';
    }
    $element['#attributes']['class'] .= ' collapsible';
    if ($element['#collapsed']) {
      $element['#attributes']['class'] .= ' collapsed';
    }
  }

  return '<fieldset'. drupal_attributes($element['#attributes']) .'>'. ($element['#title'] ? '<legend>'. $element['#title'] .'</legend>' : '') . (isset($element['#description']) && $element['#description'] ? '<div class="description">'. $element['#description'] .'</div>' : '') . (!empty($element['#children']) ? $element['#children'] : '') . $element['#value'] ."</fieldset>\n";
}

(note, I haven't even got around to customising the actual HTML output of the themed fieldset)

In this example, the contents of the fielsdet are passed to the theme function, not the fieldset itself. The output from the above will be something like:

+- my fieldset -----------------------------------------------------------+
|   +- my fieldset ----------------------------------------------------+  |
|   +-  div with hello inside  -------------------------------------+  |
|   +------------------------------------------------------------------+  |
+-------------------------------------------------------------------------+

Clearly this is wrong - the contents of the fieldset should read "hello" and just be plain text, not another fieldset!

Is this a bug, or am I doing something wrong?

(if it matters, I want to theme some fieldsets differently from others, so I can't have a system wide theme override)