OK, I figured out that it's the left and right click function of the middle mouse wheel.
If I'm really careful when I press the mouse wheel in, then yes, the cursor becomes a hand and I can drag the view around. If I move the wheel a little to the left or right and it "clicks" then the hand turns back to the regular cursor, dragging stops and the sprite components become locked.
I'm running mountain lion with a logitech M525 mouse.
Edit:
It's behaving as if the app is detecting the left or right click of the mouse button and dropping out of "view drag mode", but leaving mouse input disabled so that it can't interact with anything.