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The lambda-expression evaluates to an anonymous function of one parameter. This anonymous function gets invoked by call-with-current-continuation and the parameter - here called return - gets bound to an escape procedure, i.e. a procedure value that encapsulates the current continuation. The function prints "One " and then returns #t without ever printing "Two " because the second display-expression is part of the abandoned continuation.
http://c2.com/cgi/wiki?CallWithCurrentContinuation
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