TNT dispensed into blocks doesn't move properly

What I expected to happen:
TNT dispensed into solid blocks should behave like other entities and 'pop' out, upwards if all sides are covered.

What actually happened:
Visually, the above seems to happen, but the explosion happens as if the TNT is still inside the block.

Steps to reproduce
1 - TNT dispensed into solid block with water above which it should move into, stopping the explosion from damaging blocks. Entire apparatus blows up. (Pictures 1-3)

2 - TNT dispensed into effectively blast-proof obsidian surrounded by blocks. No water above so explosion should destroy blocks. No blocks are actually damaged and player is not effected by the explosion. (Pictures 4&5)