This case is related to [Link Removed] but is not a duplicate.
Please make sure to download the attached project as it's different than the one in the other case.
The problem here is that the non-root child components are not replaced when they are collected and their childs end up "orphaned" .
It is unclear if we want to detect this scenario and prevent the components from being transformed OR if we want to spawn a replacement parent component and reparent the childs.
The referenced EPS case proposes code "visit" the component hierarchy to detect childs of childs.
There's no existing public thread on this issue, so head over to Questions & Answers just mention UE-358129 in the post.