[dnanian]

This is, indeed, entirely by design (and the manual only advises this for advanced users).

The way this works is that we don't replace a file or folder with a symlink that points to it. If you change the name of the file or folder, the symlink no longer points to it, and there's no way for us to know it's special in any way. Thus, it works just like any Smart Update.

So: don't do this!