Cutting and pasting code sections from Mozilla to emacs with the new Auto Code Wrap feature didn't work too well for me at first, so I hadn't been using it. Tonight I investigated further and found that the following line in my .emacs config file fixes it for me.

;; perlmonks soft-hyphen fix (noop for hidden char)
(global-set-key "\xad" ())
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Update: Furthermore, putting this in my ~/.inputrc file fixes it for my shell.

"\xAD":noop
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-Blake