Note the absence of the continuation arrows and of the "empty" line.
Are you unable to reproduce this?

> I am not sure that there is a bug here.

I don't know if it is a bug, because the results seen above may be
consistent with the code (I cannot tell).  My OP was a request for a
explanation of the difference seen in the second and fourth images, as
well as (if it is not a bug) a feature request: I would like *not* to
have continuation arrows and an "empty" line in the second image.  In
other words, I would like the appearance in the second image to be like
that in the last image (modulo the cursor position and the position of
the display property).  Is this possible?  If not, why not?

Steve Berman