Either the test fails (without the decorator) and should be solved or the behaviour of html2unicode did right:
C:\pwb\GIT\core>pwb.py tests/page_tests -v HtmlEntity.test_recursive_entities
tests: max_retries reduced from 25 to 1
test_recursive_entities (__main__.HtmlEntity)
Test recursive entities. ... FAIL
======================================================================
FAIL: test_recursive_entities (__main__.HtmlEntity)
Test recursive entities.
----------------------------------------------------------------------
Traceback (most recent call last):
File ".\tests\page_tests.py", line 987, in test_recursive_entities
self.assertEqual(pywikibot.page.html2unicode('A&O'), 'A&O')
AssertionError: u'A&O' != u'A&O'
- A&O
+ A&O
----------------------------------------------------------------------
Ran 1 test in 0.002s
FAILED (failures=1)