just out of curiosity, are you guys using UOAssist for "Last Target", if so, that might be the problem. I haven't tested it in this particular event, but I know in mutli-leveled areas sometimes you'll get "target cannot be seen" when using last target and/or target self, with area spells. -I haven't used last target through UOA or targetself in ... forever.
it might not be related though, as it seems like someone would have complained about it much sooner than since this last patch.
Edit: Nm, just saw the OP's video.... definitely not the same problem.