Hi Andrew, this is interesting, I can reproduce the behavor on snv_111.
One might argue that converting one :fd- ACE into a :fdi (inherit only) a non-inheritable ACE upon inheritance is semantically equivalent, but I don't understand yet why this is happening. I'll have a look. BTW, moving this discussion to zfs.discuss might be more appropriate, as this seems to be a general ZFS issue not limited to NFSv4. Nils