It doesn't think it's a hash - it's a precedence issue. {} binds tighter than do end, so method :argument { other_method } is parsed as method(:argument {other_method}), which is not syntactically valid (but it would be if instead of a symbol the argument would be another method call).
If you add parentheses (method(:argument) { other_method }), it will work fine.
And no, the code is not actually valid. If it were, it would work.
