Won't fix. Construction script gets ran after the per-instance settings are applied, so they'll have to add extra logic to the ConstructionScript (something like: if material is not set, etc.).
When you have a multi-material mesh assigned to a blueprint in which one of the material elements is set to a Dynamic Material via the Construction Script, you lose the ability to set teh other elements when the blueprint actor is placed in the level.
Also Reproduced in 4.11 Preview 3 and Dev-Main-CL-2839874
EXPECTED: The Material is assigned to the Element Slot.
Head over to the existing Questions & Answers thread and let us know what's up.