Is it correct that the character at buffer position 1295 is a newline?

Yes.
 
Also, what are the values of the following?
  it->stack[0].current
 
(gdb) p  it->stack[0].current
$63 = {
  pos = {
    charpos = 1295, 
    bytepos = 1295
  }, 
  overlay_string_index = 0, 
  string_pos = {
    charpos = -1, 
    bytepos = -1
  }, 
  dpvec_index = -1
}

  it->stack[0].string

 (gdb) p   it->stack[0].string
$66 = 9755602
(gdb) xtype
Lisp_Symbol
(gdb) xsymbol  it->stack[0].string
$67 = (struct Lisp_Symbol *) 0x94dbd0
  "nil"

  it->stack[0].method

(gdb) p   it->stack[0].method
$68 = GET_FROM_BUFFER
 
  it->method

(gdb) p it->method
$69 = GET_FROM_BUFFER