Actually no. I don't consider this to be a bug. Billboarding happens in camera space but collision detection happens in world space (well, actually it happens in ellipsoid space, but that's another story...) and given the position in world space, it works correct even on bill boarded objects....it's just different from what one might expect.
I had the same issue in my RPG with picking of the flowers. I'm using a collision mesh instead.