I just submitted a code fix, CL 2378178.
There is network smoothing code in CharacterMovement that sets the relative location of the mesh each update. I think this broke when the mesh is detached (when simulating physics), so that relative location now becomes a global location, usually close to the world origin.
A simpler workaround than the proposed one (though that helped me narrow it down, so thanks for that!) is to just SetComponentTickEnabled(false) on CharacterMovement before the ragdoll (this disables the code in question). Or if you have C++ code you can override UCharacterMovementComponent::SmoothClientPosition() with my new code, which basically does nothing if the mesh is simulating physics.
-Zak
