Possible bug

Observe the following exchange with git 1.7.4.1, which I found rather
perplexing:

$ cat ~/reportbug-git
$ git rm -f ../INSTALL
rm 'INSTALL'
$ git ci -m "INSTALL is now provided by gnulib." ../INSTALL
error: pathspec 'ALL' did not match any file(s) known to git.
$ cd ..
$ git ci -m "INSTALL is now provided by gnulib." INSTALL
[master 0895314] INSTALL is now provided by gnulib.
 1 files changed, 0 insertions(+), 1 deletions(-)
 delete mode 120000 INSTALL

Is this a bug, or merely some magic I don't know about?

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