Yes I understand it is expected behavior when attempting to use LaTeX, but it also is an annoying side effect when using regular dollar signs instead of LaTeX. It works correctly when entering the escaped version.
Since the number of people who will use dollar signs to mean dollar signs is probably much higher than those who will use LaTeX this seems a bit backwards.
I don’t know what the solution should be though, since I myself also use LaTeX in Obsidian, but not nearly as much. Perhaps it should be resolved through a CSS snippet, but that would then require people to jump through a hoop to get “regular” behavior. Perhaps a toggle to style LaTeX in edit mode, but then that is creating yet another toggle which also seems undesirable.
The fundamental problem is that making it work “properly” for normal use means it doesn’t work “properly” for LaTeX use, and vice versa.