Whether or not this behaviour is intended, it’s extremely confusing. As a first-time theme developer building something that relies on its own archetypes, I was totally baffled as to why they weren’t working as it’d always fall back to the default archetype in the project dir.
I get the idea of being able to override anything in a theme with your own local archetypes but it makes it very hard to get themes working out of the box. I had to include this in my README.