Sure it is. OP is an outlier in how they use this panel. Most people just use it to enable/disable the built-in menu commands, or to modify their accelerators.
One very common use-case for people who speak multiple languages is enabling the keyboard switcher accelerator. I expect that they have extensive tests for common use-cases like that.
On the other hand, I expect that the test suite they use probably only tests creating one or two custom keyboard shortcuts using the panel; and doesn’t give them overly-long names. UX integration tests, above the level of the control library itself, aren’t usually concerned with being fuzz tests on what happens when you have a whole bunch of something (long strings, many items) loaded into a control. Normally the control library itself takes care of that for you (and has its own trustworthy fuzzing/property-testing suite), so you only worry about ensuring that your view controller gets the data into the control’s data binding in the right way.
I would guess that this bug is there because the view controller is summing up the lengths of the strings under a given section for some task; and then, later on, accidentally using that sum-of-lengths as the determinant for whether each string is too long to fit into its column and needs ellipsis...ing (eliding? elision?), rather than using each individual key’s length. Totally plausible bug, it makes total sense that this is an old bug that nobody discovered until now. It would seem that literally nobody has tried to do this until now.
Still, this is the type of thing that’ll get fixed immediately if you file a Radar on it. Whatever the underlying problem is, it’s on the view-controller layer, and definitely a simple fix; and there’s no decisions or opinion required on what the fix should be; and it doesn’t require any specific expertise (like having knowledge of the kernel.) It’s an “easy win” ticket someone would likely knock out the same day you submitted it.
The fact that it didn’t get caught during any of the numerous betas since Sierra, really, really implies that nobody ever thought to try this—users or developers. (Because if someone did report this bug in the beta, and it was still in the prod release, you can bet they would have blogged about it when that happened.)