I believe you have found a legitimate bug in the current version of AE.
I have the same failed result in CC 2017 that you have documented above.
I also tested it in CC 2014 and CC 2015 and it works just fine.
I have logged a bug report with Adobe, but I suggest you do the same:
This is indeed a bug since cc2015. Turn off hardware acceleration in the preferences->display and it will return to normal.
Are there any significant drawbacks I'll get by turning off mt hardware acceleration?
I have never experienced an improvement in performance using this feature. but then again, it was always buggy so I usually turned it off.