This should not work like this, it should always be at least on top of the vanilla resource pack. This should be fixed because some mods require their resources to be applied in order to work properly. An example of mods requiring their resources to be on top would be Sodium as it needs it's Better Fast Leaves textures to have leaves work properly in Fast graphics. As mods are supposed to override vanilla, this would make sense to do, while keeping the ability for custom resource packs to change textures. This shouldn't be taken as that the Fabric Mods should always be on top, as the ability to change stuff using custom resource packs is important.
It might be a good idea though to let mods toggle this functionality in development environments for testing reasons.

@modmuss50 Can we please get this solved? Some mods actually require this to work the way described as I have mentioned.