I can see why you want the behaviour that you have asked for, but I think it is better that the behaviour when paused should be consistent and when you get the the end of the playlist it does should as paused.

This is very odd. Maybe your top button is sticking or is making intermittent (noisy) contact and isn't being debounced properly? Spilled a Mountain Dew on the player lately?

I try not to...

I think it happens on my Mk1 as well, I'll have to check.