There is no bug. You have enabled continuous rasterization/collapse transformations and use layer styles. This sort of combination can have all sorts of seemingly weird results, but is actually quite logical due to how it works. I really see nothing wrong in your screenshot based on that, but perhaps there is more going on that you are simply not telling us.
Thanks for replying.
I think I can cope with "all sorts of seemingly weird results" as long as they are predictable! I don't think it's predictable that you can still see a layer even when the play head is not even on the layer. You really see nothing wrong with that? Is it possible to give me a concise explanation? You're correct, in the sense that when I remove the layer style/drop shadow from the precomposed layer I get 'normal/predictable' opacity response, but why should it not work with it? What's happening? Obviously, there are fairly easy workarounds, but it does make me uneasy that I can't understand seemingly simple issues like this, even after using After Effects for a long time.
There is a fix. Apply a layer style to your pre-comp, then turn off the any styles. CR will now evaluate layer styles in your source comp and render them in the proper order.
Why does that work? You have to understand how CR works. When you turn on Continuous Rasterization the layer type is identified before any effects or transformations take place. This is why you can scale a vector layer without problems if CR is turned on. This explains why a 3D pre-comp that contains a 2D layer will be rendered as a 2D layer.
When you apply a Layer Style you are changing the layer type in the same way you change a layer type from 2D to 3D. If you want to have transformations applied to the layer style in the source file you need to change the layer type of the pre-comp layer to Layer Styles.
Many thanks Rick, that's really good to know. As I said before, all I wanted was to understand it and then I can have predictable results.
Do you have an explanation for the play head 'anomaly'?
I would have to see all of the properties of your problem layer revealed and the pre-comp with all properties revealed . I could not reproduce the problem.