Not a bug imo and judging by the lack of changes in the past 7 years. Been reported in game and on reddit to JMods, it's just switchscape similar to turning book of bik on and off. Plus it was originally release on TH, so you know they actually QA'd it.

KC on the mask increases when lp hits 0, not when the loot spawns. For loot to double, you need to have 10 KC on the mask when the loot spawns. So you want to have 10kc on the mask already, but not have it equipped when the mob hits 0lp. Then during the death animation you equip the mask and loot will double while keeping the 10kc on the mask.

Easy changes to prevent this would to have loot spawn instantly (see Kerapac) or have KC on the mask increase when loot spawns instead of when the mob hits 0lp.