In version 1.1.0, I've noticed that obfuscated text renders incorrectly in the chat as it sometimes just flat out freezes and doesn't update constantly with varying characters as it should.

Intended. I think it would be too much of an overhead to check for for this rarely used feature all the time everywhere(would have to check all the chat messages). If you play on a server that makes use of it, turn on the constant update setting. Then it will behave like 1.0.x versions for the chat.