rebase fails mid way through due to locally modified file?

[skillzero@gmail.com]

I frequently see rebase fail after applying several commits because
git thinks there are local changes. Before the rebase started, there
were no local changes and after the rebase fails, doing a git status
doesn't show any locally modified files. I was seeing this on git
1.7.x and I also tried updating to git 1.8rc1 and it fails there too.
I see progress like this:

--
Applying: Commit X
Applying: Commit Y
Applying: Commit Z
Using index info to reconstruct a base tree...
Falling back to patching base and 3-way merge...
error: Your local changes to the following files would be overwritten by merge:
	MyFile.h
Please, commit your changes or stash them before you can merge.
Aborting
Failed to merge in the changes.
Patch failed at 0013 Commit A
The copy of the patch that failed is found in:
   /Source/.git/rebase-apply/patch

When you have resolved this problem, run "git rebase --continue".
If you prefer to skip this patch, run "git rebase --skip" instead.
To check out the original branch and stop rebasing, run "git rebase --abort".
--

If I git rebase --abort then retry, it usually fails again, but
sometimes on a different file. Once in a while, retrying will succeed.

Is this a known issue? I can't make the source for my repo available,
but is there some way I can provide more info to help narrow this
down?