Leo's deterministic reduction for Earley Parsing
I found the problem: Essentially, I misunderstood the definition. It says that  


  it is [B→αA.,k] with [B→α.A,k] being the only item in Ii with the dot
  in front of A, or if it is on the deterministic reduction path above
  [B→αA.,k].


Which should be interpreted as [B→αA.,k] should be considered to be created corresponding to [B→α.A,k]. The basic idea which seems to be elided in Leo's paper but given in Grune et al. (2008) is that, the deterministic reduction is basically simply an eager completion with all intermediate results thrown away. With this change, the parser works correctly.

(The "Parsing Techniques A Practical Guide" by Grune et al. from 2008 is the book I refer to here.)