Hopefully edited for the next release.
This is intentional and not a bug, but it seems the checks of when it triggers might have been inaccurate. The possibility of losing all genitals should now only appear if the character possesses a tail ovipositor (and at a much rarer chance than the other options--about 1/10 chance to add to the list of potential transformations).
As for less options for a genital-less character, that's just how it pans out content-wise. This particular transformation does not lock you out of regaining new genitals however, so you can always regrow them.