The problem is not so much a bug, but a fact.
The mask is definae relative to the background or destination image.
Also geometry offsets only defines the position of the source or overlay image, it does not effect the mask, and SHOULD NOT CHANGE.
Think of the mask as defining what parts of the destination is in the 'background'
the overlay that is masked is in front of the background, but behind the foreground parts of the destination.
In your case you want the mask to be relative to the source or overlay image, not te background. Currently their is no way of specifing this, other than by adjusting things yourself.
For details see IM Examples, Composite Masking.
http://www.cit.gu.edu.au/~anthony/graph ... pose/#mask