Mulahey surrenders and then re-summons his minions upon surrendering. (in other words he doesn't surrender). Then if you defeat him (again) he re summons his minions again.
His surrenders are only a ploy to buy time. Don't accept his surrender. I figured that was intentional, not a bug.
Likewise, I figured it was intentional so I did not report it as a bug. Just confirming that it does happen though. If a dev would like to step in and establish whether it should happen, that would be great.
Comments
See the discussion & comments in the other thread. The update would be to improve the flow of the encounter without changing the dialog significantly.