Yeah I think "bug" is a poor choice of word. Thats just how it works.. If weird illogical seeming bits of the mind are bugs then the whole damn thing is bugs!! Eg. Inbuilt, completely wrong, ideas about probablility, or, a propensity for mystical beliefs
Probably because your brain is struggling to save time when processing faces, and just simplifies when processing things in your peripheral vision. All the peripheral vision gets kind of screwed in terms of processing circuits compared to the fovea.
What's horrifying is imagining having some bad schizophrenia and always perceiving faces in a distorted fashion...