Listen Server Character Movement appears to have no Interpolation

Listen Server Character Movement appears to have no Interpolation causing the character's movement to appear choppy

1. Open third person template
2. Set number of players to two
3. Make sure dedicated server is checked
4. Play in Editor
5. Open the console with the '~' key
6. Type Net PktLoss=80
7. Run around in front of the other player so that they can see you
8. Notice that there is rubber banding but that for the most part it still looks smooth (expected)
9. Stop PIE
10. Uncheck dedicated server
11. Play In Editor again
12. In the client type Net PktLoss=80
13. Run around in front of the other player
14. Notice that the player skips around with no apparent interpolation

Expected: The movement of the character would be interpolated as in the first example
Result: The character's movement is choppy when not using a dedicated server