The problematic behavior appears in this specific scenario:
In this case, the custom typed value is lost and the component value is the first item in the list matching the input. Thus, the user cannot set their desired custom value.
Reproduction with steps listed inside: https://blazorrepl.telerik.com/GokVlXEW12KGZ36F15.
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ADMIN EDIT
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A possible option for the time being:
Here is a basic sample: https://blazorrepl.telerik.com/wourlNOC51FRcNAX54.