The problem's deeper than that - I've managed to replicate it on any background with virtually any combination of badges.
So, for example, when you select all Hoenn badges for example (in their natural Stone/Knuckle/Dynamo/Heat/Balance/Feather/Mind/Rain order) and then attempt to rearrange them (I moved the Rain badge between the Stone and Knuckle badge) results in the order changing into something entirely different - I got Stone/Dynamo/Heat/Balance/Feather/Mind/Rain/Knuckle.
When Multiple region badges are involved the problem manifests as soon as you feed fourth or sometimes a fifth badge into the system. sooner or later the order breaks. For example, I used the Earth, Forest, Plant, Insect and Plain badge (in that order). As soon as I fed it the Plain badge the badges on the card rearranged to Earth/Plant/Plain/Insect/Forest. Rearrangement attempts sometimes yielded the correct result but other times yielded something completely different. I'm not quite sure there's some kind of logical progression behind this - at least, not a pattern I can personally identify.
But it's there alright.