I have "Keep Source Formatting" enabled in Options, because I prefer the older default.

But now I'm getting a bizarre behavior when pasting text that includes a bullet list. Word takes the hanging indent in the bullet list and applies it to every single paragraph in the pasted text.

The problem does not occur if I right click and paste with "Keep Source Formatting" so I have a workaround, but the entire reason I made "Keep Source Formatting" the default was to avoid this extra step.

Do I have something configured wrong? Or is this just a bug?