A picture is worth a thousand macros:
I don't blame LaTeX for having difficulty in formatting this entry.
What can I do, however, to alleviate the effects and avoid the Word-like indentation?
A related question suggested by the site is How to get long \texttt sections to break which indeed produces a better aligned entry:
While I like the sane alignment, I'm not not very happy with the switch to a monospaced font (while it works in the regular text, in bibliographical entries it attracts too much attention and takes too much space).
Any other suggestions?
The entry for the above test bibitem is:
\begin{thebibliography}
\bibitem{anything-here}
"Lorem Ipsum Society,
\emph{dolor sit amet, consectetur}, May 2010
retrieved on Oct 16, 2010 from http://www.lorem-ipsum.com/whatever-here/about\%20something/here\%20takes/space\%20in\%20a\%20long/url\%20foobar.aspx
\end{thebibliography}