I don't believe there is anything wrong with the way tags are handled. I agree that a tag makes no sense on a one chorus song.

If you reduce a multiple repeat chorus to a single chorus after removing the tag, everything happens as expected.
If you reduce a multiple repeat chorus to a single chorus but leave the tag, BIAB will remove the tag for you. This also as you might expect. No problems there.

The problem is with the melody. If you leave the tag and allow BIAB to remove it, BIAB will also remove the melody. Not just what was in the multiple choruses, but the entire melody. One would expect one chorus of melody to remain, but the entire melody track is erased.