Dreamweaver 8.0.2 Library item 'fakes' the checkout process?

I have used Dreamweaver forever, but this is the first time I've tried using Library items.

The 300 page site I applied them to was all html files (no .php, .asp, .Net etc, just plain html). I replaced the hardcoded footer in each of the pages with a library item and inserted that library item in all 300 pages, then checked them all in last week.

During the last week, the client made major changes to almost all of the pages, but not the library item area.

This week I made a change to my local library item and upon saving it, Dreamweaver asked if I would like to apply the changes to all the pages that used that item. I replied YES. Dreamweaver then went through its usual process of checking out each file and applying the update.

The problem: It 'checked out' all 300 files - but unlike a regular checkout where DW actually fetches the file - in this case DW just marked all 300 of my files as checked out, and applied the library item update to all 300 pages.

This means that it applied my library item update to all 300 of my LOCAL (week-old!) files and NOT to the most recent versions of those files from the live site!!

What gives?

Normally when I update a site that is template-based, the checkout actually fetches the live version of the files it updates, but in this case, with just a library item update, it MARKED my files as checked out but did NOT actually pull down the live files.

Any thoughts? Is this a DW bug? Has anyone else encountered this?

Thanks experts!