I'm just posting again for documentation sake. This bug is small because I'm sure very few people use expand-next-level and expand-prev-level, if anyone did they would have noticed the original bug that started this thread.
The bug itself breaks Leo's outline functionality temporarily. Upon further testing I can create a situation where after executing expand-prev-level I cannot access a subtree without entering it with the right arrow or using the mouse. Using the down arrow will skip over the whole subtree as if it didn't exist if there is a sibling at that level below it. Subsequently using the up arrow will skip over the subtree again. I do not believe this to be the intended behavior.
If you wish I can submit an issue detailing this thread. I presume no timetable, as I said this is a pretty low priority.