The behavior, in general, is correct - you can't do a full rebuild while the editor is still open. I've added a better error message to that effect.
Performing a Rebuild with a hot reload on a brand new code project will fail unless both the Editor and Visual Studio have first been closed and then re-opened. The same result occurs if a Clean is attempted.
This was only tested in a binary build of the Engine, since rebuilds of a source-built Engine rebuild the entire Engine.
REGRESSION:
Yes. This behavior did not occur in 4.17.2
RESULT:
The rebuild fails with an error similar to the following: error : Unable to delete D:\Unreal Projects\Current Issues\TestRebuild\Binaries\Win64\UE4Editor-TestRebuild.dll (Access to the path 'D:\Unreal Projects\Current Issues\TestRebuild\Binaries\Win64\UE4Editor-TestRebuild.dll' is denied.)
EXPECTED:
The rebuild completes successfully.
WORKAROUND:
Close and then re-open both the Editor and Visual Studio. A rebuild with a hot reload will now complete successfully.
There's no existing public thread on this issue, so head over to Questions & Answers just mention UE-54179 in the post.