When defining a custom block reference ^<string> if the string contains capital letters than block matching fails. It falls back to matching the whole page
^<string>
string
Can easily reproduced by adding ^test and ^TEST to two different blocks. the embed logic will then fail.
^test
^TEST
This is not really a bug. BlockIDs are not case sensitive. So ^TEST, ^test, ^TeSt are all the same. We will add this to the docs.
In the future, follow the bug report template.