After tests and debugging, this issue has deep implication in the gizmo and the scene graph.
The root is meshes transforms are represented as translate/scale/orientation. This always results in an orthogonal matrix.
But when mixing parenting and scales, and doing the computation on matrix, you end up with non orthogonal matrix and invalid resulting translation/rotation/scale.
See this example:
Black square on the left is parent of the right one.
When scaling the parent, the child is also scaled but not on axis. The mesh is squizzed and the transform values can’t be computed. Hence your issue.
This doesn’t happen when having no parenting or no scales.
There is nothing I can do for now. Maybe I can try to find a work around. What do you want to achieve?