This is an artifact of the current implementation of the borrow checker. It is a well known limitation, dating back to at least 2013, and no one is overjoyed by it.
Is this working as intended
Yes.
something that should be resolved?
Yes.
The magic keywords are "non-lexical lifetimes". Right now, lifetimes are lexical - they correspond to the blocks of source that we type. Ideally, foo.method(foo.mutable_method()) would see that the borrow ends "inside the parenthesis", but for a myriad of reasons, it is tied to the entire statement.
For tons of further information see RFC issue 811 and everything linked from there.
