When I try to build a long automated railroad it only builds roads. I can build a single railroad tile just fine, but the "route to mode" only build roads.
It certainly is a bug. If I build a railroad tile the cost is 7 turn. if I build a road the coast is 3 turns. The cost to build a railroad on top of a road is 7 turns. so it definitely has to be a bug, or the charge extra for automated road building.
If you have a road already built, and do "route to" using the road function, it will build a railroad.
Found this out on a whim.
-Edit-
Sorry, I missed your point. You're right, taking 7 turns to build a railroad on an un-improved tile as well as on a road improved tile, which already cost 3 turns, seems a bit off.
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