...results in the loss of the directory contents.

The problem is that this confusdes the canonicalization code terribly.
The problem is exhibited by the samename.svn test caseL

1-1   add      branches/
1-2   add      tags/
1-3   add      trunk/
1-4   add      trunk/lib
2-1   replace  trunk/lib/
2-2   add      trunk/lib/inner_file
In the Subversion reader, disable canonicakization