@tallpaul's question: Hmm....interesting question. I used to drive a 74 Intl. tandem dumptruck with a 290 cummins that had a Hi/Lo Jacobs brake. The [on/off] microswitch on the fuel pedal was rotted off from road salt, owner too cheap to fix it. He told me not to use the Jake brake because of the switch being broke. Bah...used it anyway. I was gearing down for a turn using the jake, just to see what would happen, I depressed the fuel pedal and it certainly diminished the retarding power, white smoke come chugging out of the pipe and i'm sure choked the innocent drivers behind me.
The intake valve opens and air is forced into the cylinder by turbo boost.
Air is compressed by the piston with force produced by the vehicle's driving wheels. Near top dead center, the Jake gives the exhaust valves a little tap to open the valves slightly and vent the high pressure air as the piston dwells through t.d.c. thus dissipating the stored energy out the exh pipe.
I think the engine would still run and rev up however with diminished power if the jake is on. So much energy would be lost after the jake gives the exh. valve a little blip to let the compressed charge out.
@cccous: runaway diesel...
And finally, a word about 'runaway diesels'. This is a nasty little problem which can affect any diesel where the crankcase breather pipe feeds direct into the air intake. Land Rover turbodiesels are notorious for it, and I have seen it on 1.9 Peugeot/Citroen diesels as well. What happens is that on a worn engine, gases blow past the sides of the pistons and into the crankcase. They emerge from the crankcase breather laden with oil mist from the crankcase, which feeds into the air intake. Now a diesel will run quite happily on oil mist, and so the revs will increase as this extra 'fuel' is taken in. The higher revs result in greater crankcase pressure, more oil mist is forced out of the crankcase and sucked in to the engine, and a vicious circle is created.
Eventually the point is reached where the engine is generating enough oil mist that shutting off the supply of diesel by switching off the ignition will not stop it. The engine runs faster and faster, generating huge clouds of grey or black smoke, until it blows up. If your engine starts to run away, you can sometimes stop it by selecting top gear, jamming your right foot hard on the brake and letting the clutch out to try and stall the engine. But diesels generate a lot of torque, and if the clutch is weak, it will just slip. In this case there is nothing you can do other than abandon the car, retire to a safe distance and wait for the engine to explode. Do not under any circumstances open the bonnet - it isn't worth the risk.