I may have figured out some part of the issue.
As I traced back my steps, I noticed that I had used 'soft' returns in the text I was styling. The reason, was that a 'hard' return in the table I was working within was causing a double quote to appear (going to blame that on the font for now -- very weird) at the CR. I used a soft return to get around this extra double quote.
On updating the style, all the text between the first line and the next hard CR, should have been styled the same (despite what I was asking it to do). Essentially, I was asking Pages to use a Paragraph style AND a character style at the same time. I should have known better.
That being said, Apple, it is possible that you have a bug in how you are storing paragraph styles when a soft return is combined with differing styles within the same paragraph.
Started with this:
{CR}<style name=foo>
Foo {soft return}
Bar</style> {CR}
When I tried this, the error appears:
{CR}<style name=foo>
Foo {soft return}
<style name=bar>Bar</style></style> {CR}
I was selecting Bar and creating a new style but the text Bar was really a part of 'foo'
I believe the standard behavior would have overrode my character styles (which I had not defined) when I tried to re-define bar the paragraph style.
This is an edge case for sure. Clear as mud?