"Apply new contexts" setting not taking effect in a View

[Craino]

I have a little area setup in my business folder for my "3 W's" - Working On, Waiting On, and Watchlist.  They are all setup as folders and I add subtasks under them as needed.  I have a matching context for all three and have turned on the "Replace all contexts from the new parent" under the drag & drop option.  I then have a view ("The Matrix", lol), where I can see all the tasks I have in each category.

The problem is it looks like the "replace all..." setting only takes effect when dragging and dropping from the Outline/Planning tab.  If I drag and drop between W's on the Workspace/View tab, the contexts aren't updated.

Is this correct and functioning as intended?  I do have "sync to first tab" turned on for the workspace, so I would have thought they would update.  Just wondering if there is another option I need to enable or something.

Thanks!