Program Manager not transcoding clips

I'm on Premiere 25.0.0, in Project Manager.  I created a "Same as Source" (frame size, fps, etc.) H.264 encoding preset in Media Encorder, and imported and dialed it in, as such:

I hit OK, and I get this warning:

 
The resulting transcode folder includes several of the clips at full length, same resolution etc. (i.e., copied over).  Whereas, this same operation on a recent, older version of Premiere behaved as expected:  it chunked any master clip down to only the bits that I had used in the sequence, and at the same frame size.  This is crucial, as we are only using a small portion of a long, multi-gig 4K clip (talking head greenscreen, therefore many "bad" takes), so we want to... transcode down to only what we used.

Has the Project Manager regressed with this newest version of Premiere?  Or am I missing something?