Thank you for reporting a bug to Unity.
After reviewing the behavior, we've confirmed it aligns with the current design and intended use of the feature. We understand this may differ from your expectations or workflow.
We will close this case as 'As Designed.' If you have feedback on how the feature could better meet your needs, please let us know - we value your input and consider it in future improvements.
Additional info:
This case is rejected due to attempting to instantiate a prefab with a NaN position effectively crashing on almost all components found inside Unity, especially anything that has to do with transforms/simulation/rendering.
The mentioned workaround within the case is what the actual fix should be for the provided reproduction.
Cheers,
AlexRvn.