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Scenario one is happening because the drop-down list of timezones in an event is a visual selection only, it does not do any calculation of any kind and is there to show the user the timezone of the event. Not calculate the time. if you read the pdf document that Albertus attached to this post it shows in detail this option.
I apologize that this post has been going on for a very long time, we should have got to this point a long time ago. but regarding the drop down not calculating dates it never has and isn't designed to.