Edit to add: current release 24.0.0 and Beta.
This has probably not gotten attention because the preferred workflow uses the "Automatically set in/out" button. If you select part of the transcript, right click, and "insert," the full clip is inserted, not just the selected part. Since the option exists, it should work correctly.
In my earlier tests, the insert/overwrite buttons appeared to work correctly, but today, they (and the keyboard shortcuts) have the same effect.
See these discussions:
https://community.adobe.com/t5/premiere-pro-bugs/text-based-editing-error-multiple-synced-camera-int...
https://community.adobe.com/t5/premiere-pro-bugs/all-actions-using-text-based-editing-not-working-in...
https://community.adobe.com/t5/premiere-pro-beta-bugs/highlighted-text-not-inserting-inserts-entire-...
Steps to reproduce:
1 - Set up an empty sequence and a transcribed clip in source monitor view.
2 - Turn off "set in/out" and select some text.
3 - Right-click and pick "insert."
4 - Or select and use the insert/overwrite buttons or the keyboard shortcuts.
Result: the whole clip is inserted.
Expected: Only the selected part would be inserted.
Workaround: Use the Automatically set in/out button method.
System info
Application: Premiere Pro (Beta) v24.2.0.5
OS: Windows v10.0.19045, RAM: 63.80 GB GB, CPUs (logical): 16