Chainsaw should follow the tree generation algorithm, Recursively remove all logs and leaves within range of those logs.

http://minecraft.gamepedia.com/Leaves#Decay

Another reference algorithm:
https://github.com/sk89q/worldedit/blob/master/src/main/java/com/sk89q/worldedit/tools/FloatingTreeRemover.java

Fix in release http://dev.bukkit.org/bukkit-plugins/toolbelt/files/14-tool-belt_0-9/