Using a hammer to indirectly break a flawless budding certus quartz block will result in the flawless block dropping, which is not intended. Silk touch breaking a flawless budding block should drop a flawed budding block.

The design is that the budding block drops the next lowest durability block from the original, preventing people from freely breaking and transporting budding blocks without penalty. Using this exploit can allow players to amass hundreds of flawless budding quartz blocks, which are rare and never degrade, and place them in their base where the chunks will constantly be loaded, allowing for an unintended strategy to farm certus quartz far too easily.

To fix this, I believe you'll want to not drop the block, but to break the block with silk touch being applied to it, when the hammer is targeting nearby blocks to break. An even easier fix would be to blacklist the flawless budding blocks entirely.

So I tried this out in 1.20.1 with a nephrite hammer and I only get flawed budding blocks as a drop. This is testing by both directly and indirectly breaking the flawless blocks. The hammer code calls the Block.dropStacks() method which in turn uses the blocks defined loot table json. I believe everything is working as AE designed.

I believe this is working correctly going forward. Let me know otherwise.