I've just loaded Hotfix V4.0.3 & the behaviour is still the same. Do you have any timescale on when a Hotfix will be available?
The Developer's Guide will need updating too, as this extract shows:
Priority of the resource strings
When looking for a localized strings, the system uses the following priority:
1. cms.resx
2. custom.resx
3. database (Site Manager -> Development -> UI Cultures)
It means if there are duplicate strings with same name in all three files, the system will use the one stored in the filesystem (cms.resx).
Clearly the priority should be:
3 first, then 2, then 1, rather than the current
1 first, then 2, then 3
Thanks,
Steve