Haggish vs. Orah.

What kind of bug is this?

It's not a bug, and it can only be done with the Orc. For other units, their stats will reset, but their experience won't be taken away. It's a compensation for the lack of magic; after all, an Orc can't inflict a massive, punishing blow and gain Stone Skin in a single turn, which is +24 combat stats per turn!