Thanks for the answer.
The problem is that I"m not dragging one of the nubs, I'm simply putting the cursor inside the selection (over nothing, and not even close to the selection boundary), and it is still stretching the selection. After checking this further, my image is small (its a 16x16 pixel bitmap), and the selection is only a few pixels in size, which I created using the lasso tool. In a larger image, the problem doesn't happen.