I was just surprised by a flying fox in the cave right after defeating Wilhelm, only to find that my character's map icon is displayed right under the bat's icon.
The arrow keys still allow me to change my character's direction. In fact, I think I'm still walking around in the background, because the screen flashed again after hitting the arrow keys a bit. I suspect I'm now in two combats at once. :)
Yep, definitely two combats at once. I defeat the other enemy and now I have the combat HUD permanently overlayed on my screen, even though I'm now back wandering around on the overworld map, trying to get back to town.