Just comments, code order, and whitespace, but also confirming: This Fixes #1171, where a page loading error prevents future page loads from working.

Confirmed on this page. Scroll down and click the error message, than another link to navigate elsewhere.
http://jquerymobile.com/test/#docs/pages/docs-pages.html

js/jquery.mobile.navigation.js

@@ -591,11 +591,22 @@
 					setTimeout(function() { transitionPages(); }, 0);
 				},
 				error: function() {
+					
+					//remove loading message
 					$.mobile.pageLoading( true );
+					
+					//clear out the active button state
 					removeActiveLinkClass(true);
-					if(base){
-						base.set(path.get());
+					
+					//set base back to current path
+					if( base ){
+						base.set( path.get() );
 					}
+					
+					//release transition lock so navigation is free again
+					releasePageTransitionLock();
+					
+					//show error message
 					$("<div class='ui-loader ui-overlay-shadow ui-body-e ui-corner-all'><h1>"+ $.mobile.pageLoadErrorMessage +"</h1></div>")
 						.css({ "display": "block", "opacity": 0.96, "top": $(window).scrollTop() + 100 })
 						.appendTo( $.mobile.pageContainer )
@@ -603,7 +614,6 @@
 						.fadeOut( 400, function(){
 							$(this).remove();
 						});
-					releasePageTransitionLock();
 				}
 			});
 		}