So you are saying that when you replied to a group MMS, it didn't only send it to one person? Have you tried this on a feature phone? I believe this is the same thing of which you speak, but generalized about MMS: http://omaskon.wordpress.com/2011/06/22/caution-when-replyin...
I always thought what you turn on or off is the UI for the grouped message roll up for all subsequent replies. You can't opt out of Group Messages that are MMS because they are Group MMS.
It's not a bug. The problem is that most people don't know that MMS messages can be one-to-many AND that iOS 5 turned Group Messaging on by default (which causes group messages to be MMS instead of SMS).
The Group Messaging setting only affects messages you send out. If a third party wants to (or unwittingly) 'reply all' to an MMS message that included you, your individual Group Messaging setting won't stop that and you will get that message regardless of your setting.
If you don't think it should work this way, then you are asking Apple to not deliver messages that technically are addressed to you.
I do agree that Apple should have done a better job educating users on how it works.
I think this is not the case. TFA seems to say that replying to a many-recipient message sent with Group Messaging off is automatically considered a "reply to all" action when it shouldn't.
Group Messaging = OFF Expectation: Messages NOT sent to the Group
Group Messaging = ON Expectation: Messages sent to the Group
But Apple has it wrong ... reversed ... because message sent with GM OFF are sent to the entire Group, and those sent with GM ON are not.
How can that possibly be intuitive/logical/intentional? It's a bug. Crappy design.