When the URL ends in a slash ("/"), it works OK, but when the slash is missing, wget apparently doesn't care about the option and happily continues above the parent directory.
Compare these two lines (only the last character is different):
wget -o wget.log -nH --cut-dirs=2 -np -m http://opie.handhelds.org/feed/unstable/opensimpad/
wget -o wget.log -nH --cut-dirs=2 -np -m http://opie.handhelds.org/feed/unstable/opensimpad
The upper line stays within "opensimpad", but the lower one goes on and on, following the links in index.html
Regards,
Heiko