Oh, and also note that if you don't select the full line you want to paste (i.e. everything but the carriage return, the behavior is what I would expect.
This probably means that when you select a full line with a carriage return, and try to replace two lines, ST thinks you want to replace the first line with the line you selected and the second line with an empty line. This shouldn't work this way because when you select a full line with a carriage return and try to replace two things, you only have a single selection.
Here's another way this bug manifests:
Triple click to select a full line, and then shift, right arrow to select the next character which isn't another carriage return. You've selected one, two-line thing. Now select two more identical lines, perhaps with command + d. Paste
Expected behavior: you paste two lines at each selection point, which is consistent with what happens when the selection is 3+ lines.
Actual behavior: you paste the line at the first selection and you paste the next character at the next selection.