I've been having an issue with the H3 formatting in JIRA OnDemand today. I don't know why, but when I use the h3. formatter, it doesn't actually format the text correctly after I save my issue description. But, while I'm editing, if I click the preview button below I see the text formatted correctly.
As a work around, I've been manually formatting my (otherwise H3) titles with a "bold" and "underline" to keep them clear that they're a separate section under the H2 sections.