OK, I'm not imagining this, but not sure how to reproduce.
Mark All as Read isn't always marking all as read. And some threads are still RED afterwards.
Saw this in Tips & Tricks, News, and just successfully tried it again in General Off Topic Chit-Chat (in this one, the first 4, ClockingIt, Better laws needed for better development, Political outlook of Toodledo users, Backup iPhone music,video,photo,ibook,ringtone,camera to Mac were red. After marking Mark All Read, Political and Backup were still flagged with new posts.
But not here in Questions. When I clicked Mark all Read, they were.
Hey, maybe it's just a Monday morning hallucination.