Kim,
This really should not be allowed for Tasks. As you point out, for Tasks, this behaves just like the add new button since Tasks cannot have child tasks.
It is primarily for User Stories and Defects where it makes sense that if you have checked one of them, you can then decide on adding a new Child of that User Story or Defect or simply creating a new Peer User Story or Defect.
I will pass this feedback on to the Product Owners as well.
Michael
cc: grama23