Hi Jim,
I see no bug here, just the expected behavior. STF cannot "ruin the image" simply because it does not change the image at all.
The STF AutoStretch feature is not intended to show a pretty image. Its primary purpose is to provide a good preview of the true contents of a linear image, based on robust statistics. Such a preview can be useful to help you identify potential problems, and in many cases (but not always, and not always optimally!) also as a good starting point to perform the initial nonlinear stretch. In this sense, STF AutoStretch should be understood more as an image analysis tool than as an image processing tool.
STF AutoStretch parameters can be easily fine tuned, and the computed STF values can also be modified from the ScreenTransferFunction tool. I really don't see any problem here. However, if you upload an image where you think STF AutoStretch is not working correctly, I'll be glad to take a look.