diff --git a/source/blender/editors/interface/interface_ops.c b/source/blender/editors/interface/interface_ops.c
index 2d515aafc13..aa09a0a7ba7 100644
--- a/source/blender/editors/interface/interface_ops.c
+++ b/source/blender/editors/interface/interface_ops.c
@@ -2676,8 +2676,11 @@ static void button_activate_init(bContext *C, ARegion *ar, wmOperator *op, uiBut
 		if(but->block->auto_open_last+BUTTON_AUTO_OPEN_THRESH < PIL_check_seconds_timer())
 			but->block->auto_open= 0;
 
-	/* modal handler */
-	WM_event_add_modal_handler(C, &C->window->handlers, op);
+	if(but->block->flag & UI_BLOCK_LOOP)
+		WM_event_add_modal_handler(C, &C->window->handlers, op);
+	else
+		/* regular button handler on area, handles mouse-exit in WM */
+		WM_event_add_modal_handler(C, &C->area->handlers, op);
 
 	button_activate_state(C, but, BUTTON_STATE_HIGHLIGHT);
 
@@ -2791,19 +2794,19 @@ static int button_activate_try_exit(bContext *C, wmOperator *op, wmEvent *event)
 	ARegion *ar;
 	uiActivateBut *data;
 	uiBut *but;
-	int state= OPERATOR_FINISHED;
 
 	data= op->customdata;
 	ar= data->region;
 
 	but= ui_but_find_activated(data->region, data, NULL);
 
-	/* exit the current button, but try to re-init as well */
+	/* exit the current button */
 	button_activate_exit(C, op->customdata, op);
-	/* XXX re-init has to be done differently... */
-	/* XXX state= button_activate_try_init(C, ar, op, event, but); */
+	
+	/* adds empty mousemove in queue for re-init operator (if mouse is still over button) */
+	WM_event_add_mousemove(C);
 
-	return (state != OPERATOR_RUNNING_MODAL);
+	return 1;
 }
 
 static int button_activate_invoke(bContext *C, wmOperator *op, wmEvent *event)
@@ -2837,10 +2840,8 @@ static int button_activate_modal(bContext *C, wmOperator *op, wmEvent *event)
 	/* check if the button dissappeared somehow */
 	if(!(but= ui_but_find_activated(data->region, data, &block))) {
 		data->cancel= 1;
-		if(button_activate_try_exit(C, op, event))
-			return OPERATOR_CANCELLED|OPERATOR_PASS_THROUGH;
-		else
-			return OPERATOR_RUNNING_MODAL|OPERATOR_PASS_THROUGH;
+		button_activate_try_exit(C, op, event);
+		return OPERATOR_CANCELLED|OPERATOR_PASS_THROUGH;
 	}
 
 	if(data->state == BUTTON_STATE_HIGHLIGHT) {
diff --git a/source/blender/editors/screen/screen_ops.c b/source/blender/editors/screen/screen_ops.c
index 095f6e1a74b..ef8b47a368f 100644
--- a/source/blender/editors/screen/screen_ops.c
+++ b/source/blender/editors/screen/screen_ops.c
@@ -278,13 +278,17 @@ static int screen_cursor_test(bContext *C, wmOperator *op, wmEvent *event)
 		} else {
 			WM_set_cursor(C, CURSOR_X_MOVE);
 		}
-	} else {
+		return OPERATOR_FINISHED;
+	} 
+	else {
 		ScrArea *sa= NULL;
 		AZone *az= NULL;
+		
 		for(sa= C->screen->areabase.first; sa; sa= sa->next) {
 			az= is_in_area_actionzone(sa, event->x, event->y);
 			if(az!=NULL) break;
 		}
+		
 		if(az!=NULL) WM_set_cursor(C, CURSOR_EDIT);
 		else WM_set_cursor(C, CURSOR_STD);
 	}
diff --git a/source/blender/windowmanager/WM_api.h b/source/blender/windowmanager/WM_api.h
index 4b9c01b3e33..509056bfe71 100644
--- a/source/blender/windowmanager/WM_api.h
+++ b/source/blender/windowmanager/WM_api.h
@@ -75,6 +75,7 @@ void		WM_event_remove_handlers			(bContext *C, ListBase *handlers);
 
 void		WM_event_add_message(wmWindowManager *wm, void *customdata,
                                  short customdatafree);
+void		WM_event_add_mousemove(bContext *C);
 
 void		WM_event_add_notifier(wmWindowManager *wm, wmWindow *window,
 					int swinid, int type,
diff --git a/source/blender/windowmanager/WM_types.h b/source/blender/windowmanager/WM_types.h
index 35dad1f0db2..be0fbb4fca6 100644
--- a/source/blender/windowmanager/WM_types.h
+++ b/source/blender/windowmanager/WM_types.h
@@ -47,7 +47,8 @@ typedef struct wmEvent {
 	
 	short type;		/* event code itself (short, is also in keymap) */
 	short val;		/* press, release, scrollvalue */
-	short x, y;		/* mouse pointer position */
+	short x, y;				/* mouse pointer position */
+	short prevx, prevy;		/* previous mouse pointer position */
 	short unicode;	/* future, ghost? */
 	char ascii;		/* from ghost */
 	char pad1;		
diff --git a/source/blender/windowmanager/intern/wm_event_system.c b/source/blender/windowmanager/intern/wm_event_system.c
index 9432036b4bc..85cf0786403 100644
--- a/source/blender/windowmanager/intern/wm_event_system.c
+++ b/source/blender/windowmanager/intern/wm_event_system.c
@@ -326,7 +326,6 @@ void WM_event_remove_handlers(bContext *C, ListBase *handlers)
 	
 	/* C is zero on freeing database, modal handlers then already were freed */
 	while((handler=handlers->first)) {
-		/* we have to remove the handler first, to prevent op->type->cancel() to remove modal handler too */
 		BLI_remlink(handlers, handler);
 		
 		if(C && handler->op) {
@@ -473,18 +472,30 @@ static int wm_event_inside_i(wmEvent *event, rcti *rect)
 	return BLI_in_rcti(rect, event->x, event->y);
 }
 
+static int wm_event_prev_inside_i(wmEvent *event, rcti *rect)
+{
+	if(BLI_in_rcti(rect, event->x, event->y))
+	   return 1;
+	if(event->type==MOUSEMOVE) {
+		if( BLI_in_rcti(rect, event->prevx, event->prevy)) {
+			return 1;
+		}
+		return 0;
+	}
+	return 0;
+}
+
 static ScrArea *area_event_inside(bContext *C, wmEvent *event)
 {
 	ScrArea *sa;
 	
 	if(C->screen)
 		for(sa= C->screen->areabase.first; sa; sa= sa->next)
-			if(wm_event_inside_i(event, &sa->totrct))
+			if(BLI_in_rcti(&sa->totrct, event->x, event->y))
 				return sa;
 	return NULL;
 }
 
-
 /* called in main loop */
 /* goes over entire hierarchy:  events -> window -> screen -> area -> region */
 void wm_event_do_handlers(bContext *C)
@@ -503,10 +514,10 @@ void wm_event_do_handlers(bContext *C)
 			C->window= win;
 			C->screen= win->screen;
 			C->area= area_event_inside(C, event);
-				
+			
 			/* MVC demands to not draw in event handlers... for now we leave it */
 			wm_window_make_drawable(C, win);
-			
+				
 			action= wm_handlers_do(C, event, &win->handlers);
 			
 			/* modal menus in Blender use (own) regions linked to screen */
@@ -532,9 +543,11 @@ void wm_event_do_handlers(bContext *C)
 			if(wm_event_always_pass(event) || action==WM_HANDLER_CONTINUE) {
 				ScrArea *sa;
 				ARegion *ar;
+				int doit= 0;
 
 				for(sa= win->screen->areabase.first; sa; sa= sa->next) {
-					if(wm_event_always_pass(event) || wm_event_inside_i(event, &sa->totrct)) {
+					if(wm_event_always_pass(event) || wm_event_prev_inside_i(event, &sa->totrct)) {
+						doit= 1;
 						C->area= sa;
 						action= wm_handlers_do(C, event, &sa->handlers);
 
@@ -546,24 +559,26 @@ void wm_event_do_handlers(bContext *C)
 									C->region= NULL;
 
 									if(!wm_event_always_pass(event)) {
-										action= WM_HANDLER_BREAK;
-										break;
+										if(action==WM_HANDLER_BREAK)
+											break;
 									}
 								}
 							}
 						}
 
 						C->area= NULL;
-
-						if(!wm_event_always_pass(event)) {
-							action= WM_HANDLER_BREAK;
-							break;
-						}
+						/* NOTE: do not escape on WM_HANDLER_BREAK, mousemove needs handled for previous area */
 					}
 				}
+				/* XXX hrmf, this gives reliable previous mouse coord for area change, feels bad? 
+				   doing it on ghost queue gives errors when mousemoves go over area borders */
+				if(doit) {
+					C->window->eventstate->prevx= event->x;
+					C->window->eventstate->prevy= event->y;
+				}
 			}
 			wm_event_free(event);
-
+			
 			C->window= NULL;
 			C->screen= NULL;
 		}
@@ -643,6 +658,14 @@ void WM_event_add_message(wmWindowManager *wm, void *customdata, short customdat
 	}
 }
 
+void WM_event_add_mousemove(bContext *C)
+{
+	wmEvent event= *(C->window->eventstate);
+	event.type= MOUSEMOVE;
+	wm_event_add(C->window, &event);
+	
+}
+
 /* ********************* ghost stuff *************** */
 
 static int convert_key(GHOST_TKey key) 
diff --git a/source/blender/windowmanager/intern/wm_init_exit.c b/source/blender/windowmanager/intern/wm_init_exit.c
index fb8101168e2..3346f0607a9 100644
--- a/source/blender/windowmanager/intern/wm_init_exit.c
+++ b/source/blender/windowmanager/intern/wm_init_exit.c
@@ -164,6 +164,7 @@ void WM_exit(bContext *C)
 	/* modal handlers are on window level freed, others too? */
 	if(C && C->wm) {
 		for(win= C->wm->windows.first; win; win= win->next) {
+			ScrArea *sa;
 			ARegion *ar;
 			
 			C->window= win;	/* needed by operator close callbacks */
@@ -171,6 +172,12 @@ void WM_exit(bContext *C)
 			
 			for(ar= win->screen->regionbase.first; ar; ar= ar->next)
 				WM_event_remove_handlers(C, &ar->handlers);
+			
+			for(sa= win->screen->areabase.first; sa; sa= sa->next) {
+				WM_event_remove_handlers(C, &sa->handlers);
+				for(ar= sa->regionbase.first; ar; ar= ar->next) 
+					WM_event_remove_handlers(C, &ar->handlers);
+			}
 		}
 	}
 	wm_operatortype_free();