While in Bali, we heard and read stories from Dili of street riots, trashing of shops and people escaping to Indonesia to save themselves.
I seem to recall cycling home across Dili late on the Saturday of the weekend when all this happened. I saw nothing.
I have tried to piece together as much as possible but lay no claim to incredible accuracy. But I know of no expat who has been involved in or seen any trouble. Most of the talk comes from the Timorese themselves and is based on rumour and there appears to be some degree of exaggeration.
However, there definitely was some trouble and it was fairly specifically targeted, it seems. It appears to have been related to fall-out over the recent sacking of 500 or so military staff from the army. Although this issue was primarily over poor wages, it also uncovered the long-running (and well-known) tensions between those who live in the western half of Timor Leste and those who live in the eastern half.
Some good old-fashioned intolerance rose to the surface and some of the other persuasion found their house or shop the target of rocks and the like. Travel out of Dili was not recommended as cars were being stopped by masked groups and if the incorrect allegiance given, cars were known to be trashed (windows broken and tyres slashed). I think most of the trouble spots were really in the “suburbs” and villages outside of Dili.