I don't think it's a bug. I think it's intentional so you can see what the people you are in a dungeon with are using (so you know perhaps why they are dying or surviving better than you are). In the subtowns and dungeons, it pays to know what your team is using. I wouldn't mind if it didn't show what was under the costume when you were in Haven, though.

I'm going to throw in with the crowd who'd appreciate at least an option to have Full Inspect checked on automatically.

Some people might not like having it on that way, so leaving the option to not have it checked on automatically would be helpful as well.

I really see no point in hiding the real equipment you are wearing. I would like to see that Inspect Player actually does inspect someone fully regardless of what they have clicked on or off. The choice to be fully inspected (Full Inspect option) should be removed and one should always be able to inspect all pieces of armor and costume someone else has on.

Well, i guess it isn't a bug icee, but i couldn't really think of a better word. I still agree with the first guy.

I'm surprised full inspect is a toggle, considering a recent dev post about the difficulty of implementing toggle switches. I'd be happy with inspect always showing me the full character sheet of the inspected player, as though I had clicked on my own character sheet.

I agree
Make the Inspect Armor a default that needs to be turned off. And have it remember whether it was on or off when you log out.

Inspect should be Off by default, but stay On permanently when selected, until you toggle it off yourself.