Removing Inherited Term, Not removing Duplicate Terms

I followed the documentation provided in the module.

I have 2 Vocabularies, Tags & Incoming Tags. Tags in the "good copy" of taxonomy i want, and Incoming Tags is my sandbox for new tags/un-wanted tags. All nodes from feeds are saved to a content type named Feed Item.

I am encountering a few issues:

1. My Inherited Tag that i'm passing (New Feed.png) is being removed from the Feed Item nodes (PSD Feeds.png) that are being created by the feed.
2. Look at the Photo Effects tag on the feed list of nodes (PSD Feeds.png). Photo Effects already existed in Tags (Terms in Tags - News Aggregator Site_1245904126014.png), so not sure why the new feed item has a reference to the Photo Effects in Tags, and creates a new term in Incoming Tags? shouldn't it reference the existing term in Tags and not create a new one in incoming tags?

Here's my process. I create a new feed, tag the feed if i want every node it creates to have a certain term (this example i want all new nodes from the feed at psdtuts to be tagged as Photoshop along with the original terms that come from the feed). I save the feed, then move over to the map tab to map the options->tags to the incoming tags vocabulary.

The behaviour i was expecting would be for taxonomy compare to check if the term is in my Tags Vobcabulary, and if it is, use that one and do not create/use a term in Incoming Tags.

I have attached Screen shots of all applicable configurations.

Cheers.