When the destination selection list is constructed for a package, it will first include the eligible ship destinations. Those are the destinations that a package can actually be shipped to.
The SHIP_DEST_LIST_MAP_RULE_ONLY option is then checked only for that set, possibly further lowering the number of output entries in the final list.
There is a case where switching the RULE_ONLY option will not filter any entries out so the output will be the same regardless if it is OFF or ON. I believe this is the case with the example you mention in this defect. And this case might lead you to the conclusion that RULE_ONLY can be ON by default.
I believe that the reason why you do not see the destination you expect in the list is that only those destinations whose mapping rules would allow a shipment of the package outputs appear in the list.
If (in foreground) you go to option 5 PACKAGE, 7 BACKOUT, Select the package in question and B - Display Data Set Backout Info, you can see the backout data set names for the package. If all of these data sets are excluded by the rules, the destination will not appear in the list (regardless of RULE_ONLY option settings).