Interestingly, I've just updated my course discussing this web feature. It is known as "group squashing" (also search help file) and applies only in web documents. When a group is stretched/squashed, it is not done so affinely like would happen in print documents; instead the constituent objects aren't stretched and only their positions are changed. Apparently, the rationale for this is that in web documents, when stretching/squashing headers or footers eg in mobile site variants, it's more useful for this kind of squashing behaviour. As you've discovered, you can Alt-toggle to revert back to affine scaling. Alternatively, you can use a print document or permanently turn this off by setting the registry entry Dragging\EnableGroupSquash to 0.
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