Here is an update to this question from Microsoft Technical Support:
We have been able to identify the source of the issue – The reason that your auth admins are unable to reset the passwords of other auth admins is due to restrictions placed on role-assignable groups.
As noted previously, our documentation clearly states that Auth Admins can reset the passwords of other Auth admins, with the only exception being noted as roles assigned at the scope of an administrative unit.
After testing this and replicating the issue, I was puzzled, I continued to test and found that this behavior is only present when the roles are assigned by a role-assignable group, and not when the roles are assigned directly to the users themselves.
This is working “as intended” but is poorly documented, and I will be requesting a documentation update to reflect this information. Below is the excerpt that explains the behavior that we’re seeing, with the associated documentation here.
To continue to utilize role-assignable groups opposed to direct assignments to users, you will need to provide the role of the Privileged Authentication Admin instead of the Authentication Admin. Otherwise, what you’re requesting will not be possible.
Please let me know if you have any questions regarding this, I am moving forward with a documentation update request to reflect this information where appropriate.