I'm not entirely sure at this moment, but I seem to recall that Mozilla properly interprets them as well. Update: I was wrong; my Mozilla 1.2.1 release doesn't play.
According to Coruscate in Re: Space or Soft Hyphens, with Mozilla 1.01
"the text does not wrap". So, no, it doesn't unless a newer version has fixed that -- but according to bugzilla#9101, this has been identified as a bug but not fixed yet.
But it is easy to check, just visit the link I provided earlier in this thread.