I can confirm this. Recently renamed a user as I handed off an old PC to my wife. The old directory is still there but now all the files within it are inaccessible. Caused a lot of issues!
This shouldn't happen. The directory is still there, but it also should still be your profile directory. Changing a user name shouldn't change the SID and make your files inaccessible.
Lots of things with Windows should not happen, but they do. It shouldn't forget that I have bluetooth hardware installed, but it does. Windows just (in)conveniently forgets things. Or, conversely, remembers things that should be forgotten.
Not really. Renaming the username-part of the user's home folder has all kinds of data loss potential (apps not being able to find documents, documents linked to each other etc.). Therefore Windows takes the perfectly appropriate approach of leaving the user's files named as they were. Permissions etc. all remain unchanged and allow the same renamed user access. Just the folder on disk shows the old name.
It's a rare operation that most people don't ever do, and so receives little testing. Certainly little testing in a real, deployed, messy system, and not just a pristine, vanilla QA image in some Microsoft Windows test bed.