Hi Mike, thanks for taking the time to figure out how to reproduce the bug you've found, that saves the trouble of the back-and-forth with users to get to the actual cause of the problem. I'm able to recreate what you're seeing over here with the instructions you've provided so I have a good specimen to work with now.
I have an inkling that somehow the rest-machining is confusing the feeds and rapids, where a rapid has attached to it a retract-to-safe-Z move, then the actual rapid to the next cut's XY, followed by a feed/engage move to begin the cut, but if it's flagged as a "feed" it doesn't generate the retract, rapid, or engage moves and instead just treats it like any other feed move. It could very well be something entirely different, maybe in some of the geometry logic that "cuts out" the area that's already removed by previous operations from the generated cut paths that should only cut where there's still material.
In either case I'm on it! I'll let you know once I've squared it away and the fix will be rolled out with the v1.43a release. In the meantime feel free to let me know if you have any questions, suggestions, feedback, or come across any other issues that need to be looked at.
Thanks again :)
Charlie