This bug seems to be mainly cosmetic (affecting the depth of visible chapters in higher level books), but it also would affect Book subscriptions for those higher level Books such that updates to the invisible chapters are not included in the notifications.
The bug relies on a design flaw in the logic which constructs the parentlist for every Book that is given a parent Book. There is no way to fix this without rewriting the whole class, and then forcing an update on every Book in the database (since the parentlist entry for any book is dependent on accurate parentlist entries for related books). This is a massive undertaking, and something we've already done in the VaultWiki 4 upgrade script. In the interest of time, it will not be back-ported to VaultWiki 3.