I get the same thing with my Player 1 button; it doesn't register a press until released. I'm on an I-Pac 4, and a while back I monkeyed with the settings to get rid of the Escape shift function, p1 & p2 held simultaneously. Too many test menus require simultaneous p1 & p2 presses, and I have an Escape button on my panel anyway. I thought that the press-upon-release was something to do with that shift function, but the behavior persisted even after I got rid of the shift command.
It doesn't cause me any problems, but I often notice it; the switches I chose for admin features (enter, escape, f2, etc) have a bad habit of registering multiple presses on one press, so when I go to the controls settings in the Tab menu, sometimes Enter gets pressed twice-- once enters the control menu, second activates the reassign for Player 1 start. Every time I go to set it back to 1, the "1" then shows as highlighted, like all controls that have been changed from their defaults. It works fine, but there's something going on with that command other than just the standard press, and I don't know what it is.
But it works, and it doesn't really cause any issues as Player 1 Start isn't exactly one of those commands that requires precision timing. I'm curious as to what it is, but I don't see a need to risk glitching something to try and figure it out.