Yes, this is how they handle it. Test sends mimic live sends - meaning that the information in the email (including the 'tracking' data - email address, first name, id, etc.) all are what is tracked. Basically it just overwrites the 'Send To' address at the time of send, not the contact information.
For instance, even though you may send the test send to multiple email addresses, the tracking will only ever show a single 'sent to' contact in the tracking.
This is because if they were to overwrite the email address for this send, it could leave the system open to data corruption (manipulating your data on each send) and could potentially slow up the system, especially on those with multiple emails sent per test. As it would essentially create a new contact and then delete it on each send.
This normally is no issue as there are very few use cases for test send tracking. The only way I can think of to get around this is to create a test Data Extension or list with all the necessary values/fields and use that for sends, just make sure to check 'Suppress From Send Report' and if you have a send log, make sure to uncheck 'Retain Send Log Data'. This will give you the individual level tracking you need without sending as a live send.