Hey Guys,
This actually isn’t a bug. Ironically the “blend weight” feature mentioned in this post actually is the bug. What the OP is seeing is the material instance’s distortion texture fading out to the master material’s distortion texture. In other words the material instance’s settings are blending into it’s master’s settings. It just so happened to work well with this particular case.
The intended workflow for this type of effect is the following. If I have a frost effect postprocess effect and I want it to fade out based off blend weight then I need another postprocess with another postprocess material instance based off the same master material as the frost effect. Except this material is the completely faded out version and is essentially just SceneTexture:PostprocessInput0 plugged into emissive color full blast. Alternatively you can just make a copy of the frost postprocess material instance and change some parameters around and it will fade into that. So basically blend weight is intended to fade between postprocess materials. If there isn’t another post process material to contend with it will just turn on and off.
I hope that clears things up.
Ed