Steps to reproduce
Starting from scratch, what are the steps to make the bug happen? The fewer the steps, the better.
Make an item (1) with a long note and add a link to another item (2: the link can be in the bullet, it doesn’t have to be in the note for this). Go to the linked-to item (2) and look at the backlinks section. The note of (1) will be fully expanded regardless of any setting.
What do you expect to see after carrying out the steps above?
Personally I think the note of (1) should conform to the settings of the current document.