I have to say that learning that this is a issue is a big eye opener for me.
I have been expieriencing strange beheaviour including this perceptual bug. I understand the OP completely. This issue will become actual again eventualy unless, I think the issue is adressed properly.
I now understand that when I need the gain functionality on my frozen instrument track I need to move it to an audio track.
As my projects have both vst instruments and audio I was expieriencing this as a bug. But had no idea how to replicate it. As I normally can not be bothered with testing or replicating bugs I always try to find a fast work around (inserting a plugin, wich is far from ideal and caused me to cuss at the bakers in myself).
Thanks to the OP I understand the dynamics of the 'bug'.
In the ideal situation a frozen instrument track should have the gain knob functioning as a gain knob (it does nothing with frozen tracks, offcourse thats logical when understanding it is a velocity knob for MIDI velocity. The gain knob should be renamed (I read this to be a lot of effort, just hypotheticaly to minimise reacurrency of this issue.) when in instrument mode (non frozen tracks). When the track is frozen the knob should be invisible (not very ideal) or change the functionality 'copied' from the audio gain knob.
Nonetheless, Thanks everyone and double THNX to the OP. If he hadn't started this thread it would have taken a lot of frustration and wasted time for me to find out all by myself.