So after some careful research I've discovered that SharePoint does not support item level edit permissions for publishing pages. This behavior is easily reproducible just do the following steps below to observe this. This seems to be something that should work in SharePoint as that is what it's really built for. Is there any good solution for this limitation? Also WTF Microsoft?
- Create a stock publishing site collection.
- Grant visitor access to some low privileged user.
- Create an article page and break permissions and give the user contribute permissions to the list item or full control.
- Load up the page and authenticate with low privileged user and try to edit the page. You'll observe an error pr that the page is in shared mode. In face this will only work if you grant the permissions at a list level.
P.S. This seems to be fixed in the SP2010.