I tried <$paranumonly> and it made no difference.
Whenever I update the book the text in the x-ref still gets large.
The 'A' 'B' etc., are just text with a character format for 24-point font. The text ("Section A Safety") is also being read for the automatic headers on each page, but the headers are not exhibiting this font wackiness.
For fun, I changed the 'A' to 'Default Font' (11-pt. font) and the problem went away for that one x-ref when I updated the book, so it must be related to the character format.
So what is the <$paranum> in your x-ref format referencing?
Anyway, I just tested this scenario with a document in a book and the same document as a standalone. You are correct, it is a funky error when the update is done from the book. The character tag is being picked up in the <$paratext> building block and cascades through the rest of the paragraph content.
Please report this as a bug via: https://bugbase.adobe.com/index.cfm