System Information
Windows 7 64 bit, nvidia GTX970

Blender Version
Broken: (2.77 official build 22a2853)

Short description of error
An object, which is scaled down on one axis to zero behaves like a normalmapped plane of the scaled object.

Exact steps for others to reproduce the error

Expected behaviour:

Create a monkey.
Duplicate monkey.
Scale suplicated monkey on the z axis down to 0.001 (s->z-> 0.001)
See expected bahaviour, flat monkey mesh is shaded flat.

Wrong behaviour:

Create a monkey.
Duplicate monkey.
Scale suplicated monkey on the z axis down to 0 (s->z-> 0)
Monkey is now flat, but its shading looks like a normalmapped bake of the original monkey.
When you scale any object in the scene on the "z" axis, the shading on the duplicated monkey will change.
Going into wireframe mode, rotating a bit and then switching back to solid view, will display even more wrong shading on the duplicated monkey (for one frame, til the next redraw of the 3d viewport)

Thanks for your time, you are awesome :)

lino