This glitch was due to the new rules for handling layering of extended or pixel-displaced icons, movement being a somewhat special case. When two objects occupy the same position and drawing layer, the stacking order is normally used to determine the drawing order. With displaced icons, stacking order is not known, because the icon covers ground outside of the object's grid square. The rule in this case is to stack icons from the south on top of icons in the north, when the two are in the same drawing layer; secondarily, icons from the west are stacked on top of icons in the east.
The point here is that you can make a tall object with an extra icon displaced to the north and this will automatically stack on top of other things in the same layer, as expected.