Spoke too soon; looks like distance transform is not working right. 
edit.
Tried with other images and works fine; for some reason image at link below doesn’t work. Weird. Even the previous version of G’MIC I had had same issue with this image. Not sure why.
Tiny mushroom - macro play raw - Processing / Play Raw - discuss.pixls.us
edit.
Now if I save as PNG and then open in another program and copy image to clipboard and paste into GIMP, it works. Wonder if it’s a colorspace issue that I’m not seeing that’s causing the issue?