The fundamental limitation is that we can only have one instance
("dupli") generator at a time. Because the mesh output of a curve
object is output as an instances, the geometry set instances existed,
replacing the object as font instances. The "fix" is to reverse the
order. The behavior won't be perfect still, but at least the old
behavior will be preserved, which is really what matters for a
feature like this.

One way to take this change further would be completely disabling
regular geometry evaluation while this option is active. However,
I'm not sure that would really improve the state of the code though.

It's a shame we can't build this "Object as Font" behavior with geometry nodes, maybe it's worth thinking a little about how that would be possible sometime. (Especially if we want to eventually replace the dupli generators).