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I spoke with QA and the people responsible for the settings tech. We have repro'd the bug internally and are tracking it now. There is indeed a bug, and I was mistaken about the design:
Settings saved on the server are character based, not account based. So latency being one such server saved setting should be on a character by character basis. If you turn A ON, or observe A as being ON, it should not turn B ON (assuming B was off before.)
Thank you, everyone, for your examples.
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