Final update from me for now.
On the original code that is in src right now, I was able to reproduce the defect by making Kreljnok's Sword of Eternal Power lore (sql: UPDATE items SET loregroup = -1 WHERE id = 60332
and continuously aug/deaug. Happened on clicks between 0 and 20 times. My guess is the client only checks every so many milliseconds and if the server "Fixes" it fast enough between these points then everything is good.
After the patch (first post) I was unable to reproduce this issue any more. Tested 60 combines without an issue.