Album Artist is irrelevant to this bug and yes, even though there is a fix I'm calling it a bug.
I had several albums out of order. One of them seemed quite obvious: the two tracks that were out of order had composers listed, while the rest of the composer fields were blank.
Using cut and paste to make sure the values were identical, I selected all the songs and went to view info. I filled in Artist, Album Artist, Sort Artist, and Sort Album Artist with the same value (the name of the band). I also used cut and paste to make sure that Album and Sort Album were both identical (the name of the album). I set the year and the genre in case one of those things was messing up the sort order.
After this, the order of the tracks was 5, 9, 1, 2, 3, 4, 6, 7, 8, 10, 11, 12.
So I did the same thing again and deleted the values in the Composer field.
After this, the order of the tracks was 5, 9, 1, 2, 3, 4, 6, 7, 8, 10, 11, 12.
So I did the same thing again and added the value that had previously in the Composer field, but to all the songs.
After this, the order of the tracks was 5, 9, 1, 2, 3, 4, 6, 7, 8, 10, 11, 12.
I shut down iTunes, rebooted the computer and opened iTunes again, then went to look at that album.
After this, the order of the tracks was 5, 9, 1, 2, 3, 4, 6, 7, 8, 10, 11, 12.
So I sorted on "Album by title" (which had previously been "Album by artist and year") as sacred_june suggested, then went back to sort on "Album by artist and year."
Now the order of the tracks is correct.
It's nice that there's a workaround, but don't for a second pretend that there isn't something broken in iTunes's sort logic.
All that said, yes, you described the use of the Album Artist field correctly.