I looked in to this and it actually doesn’t appear to be an engine bug, but it’s something we can message more clearly so I’ve taken some steps to do that.
In cases like this where you make a query and are initially overlapping something, we can’t really determine a good ImpactPoint or ImpactLocation, because you started in the object with more than one point of contact (a whole surface of contact). In this case we set Location and ImpactPoint to the start location.
I added a new bool to BreakHitResult to report “Initial Overlap”, and improved the comments on the other relevant fields to hopefully make this more clear in the future.