You are right, the watch becomes very slow too, perhaps becasue all the CPU resources are diverted.
Regardless, out-of-range and back should be a pretty standard regression test and if this bug has made it beyond, it relfects how incompetent their engineering is.
Thanks for posting. I've noticed my active watch draining battery faster than usual over the past week. Now it loses BT connection within seconds. It's extremely annoying considering the whole point of a smart watch is to share information with a smartphone.