It seems the Location field wants the full path to the underlying OSX binary not just the Firefox.app application package abstraction. So you can use the following to launch firefox:
/Applications/Firefox1.5.app/Contents/MacOS/firefox
Although this will launch firefox, it will launch it in the background so you will have to “alt-tab” or “open-apple-tab” to switch to the launched firefox.
Even though this works as a workaround, we will add this report to our tracking system. Thanks for the report and sorry for the inconveince.