Your usage is correct - researching this has led me to discover that there is a specific situation in which it does not work: The Dates/Format Date and Time plugin is only implemented on the server side, and this means that when it is placed in a client side context, the client should make a server call to perform it (this is the expected behavior for any Tersus plugin which is only implemented on the server-side) - a definition error causes this behavior to fail with regards to this specific plugin.
This issue will be fixed in the next release.
As a workaround, encapsulate Format Date and Time in a Basic/Service template.
FYI, Format Date and Time uses java formats for both <Format> and <Timezone> strings. ( See http://java.sun.com/j2se/1.4.2/docs/api/java/text/SimpleDateFormat.html ).
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