You're right, and I didn't try that case. It appears that if a line is entirely empty, it will not get indented when you increase the indentation level. If a line consists of only tabs, though, then it will be indented as lines with non-whitespace characters are.
lorem tab, enter, tab, enter
lorem tab (not sure how to do the buttons)
Then select all and indent. Line seven should have two tabs on it.
Using 3114, but I doubt it's changed.