My assumption of a "bug" would more properly stated as "not anticipated."
It is impossible for a capital city to leave a realm. And in the past, the duchy and city were the same.
It used to be that putting a fractious duke in charge of the capital duchy was the safest choice you could make because they literally could not defect. It anchored them to the realm with their only way to leave being to resign first.
We now have duchies separate from cities, and in this case the duchy left, taking the capital with it.
This was simply not anticipated in the original code so the game never thought to strip "capital" status from the city. And it never thought to stop the secession of the capital city because it was the DUCHY leaving...that happened to have the capital in it.
We would have had to purposefully change it because the game did not do it. It is an interesting shift in what is possible and how things go when certain small changes result in shifts that nobody expected.
