As far as I can tell, haven't fully investigated yet, but I think you're forced to use dynamic trim to break a circle. It is handy as you can trim multiple entities by holding down the left button or single click to get rid of extraneous ends. However, I'm now very leary of using it as the results can be unpredictable and difficult to find and fix. If I could change the flyout default I would.
FYI this bug is very much alive and well in WF. I just tested it with Date Code 2002490 and I can reproduce the bug. It has the same problem irregardless of whether you pick an entity or select by holding down the left mouse button and sketching a curve throught the entities to trim. This bug is very easy to reproduce. When I get an answer back on the bug with PlanarSketch crashing when trying to add a circle in the Legacy Application I'll yank Tech Supports chain on this one. And I'll call it in on WF so they can't sleazy out and say they're not going to fix it in 2001.
-Bernie-