Reuse Content doesn't insert ph in correct location

In ContentEditor, Reuse Content places ph element outside of paragraph when in li/p or dd/p, but inside the intended p element in other contexts.

In some cases (apparently when cursor is in middle of p content), it replaces the p element with conref'd ph.

This is out-of-the-box ContentEditor configuration. KC2016 Build 12.0.2417.0.

Can this be fixed with configuration? Any other ideas? Thanks