Further experimentation:
-An "Unsuitable area" extends for five tiles past the override piece/stub.
-The game will refuse to place the auto-destroy tile directly adjacent to any of these five tiles if it is in the same orientation as the existing piece.
-If two portals are placed adjacent first, dragging subway from one creates an undraggable stub on all adjacent override tiles and all tiles adjacent on further portals.
-Because of the above points, it is physically impossible to have two portals directly next to each other and have them both function.
-The space directly in front of the glitched stub is also "unsuitable" due to the Subway network having auto-connect.
-The cosmetic override when two RHW-4 portals are adjacent does not function.
-Any manipulation creates severe lag, placing a portal takes ~2 seconds and placing an adjacent portal takes ~10 seconds, demolition can take anywhere between 3 and 30 seconds.
If any of this is untrue for the NAM Team, then it's highly likely being in LHD is messing things up somehow. Perhaps LHD messes with the Subway network somehow? Or are the RULs just missing or incompatible?
Also, I don't have a way to transition Avenue to Subway and I am using the MHO, so old FLUPS or AVE tunnel shenanigans it is...
EDIT: I also seem to be unable to drag straight into the overridden Subway when coming from the opposite direction with another override.
My hypothesis is, since IIRC the overrides are the result of leftover code from an unfinished auto turn lanes idea, then:
-Subway existed in the base game, and was copied directly from Street before the latter's ability to be dragged diagonally was disabled (the only network for which this is the case)
-Alternatively they were all just copied from Road
-IIRC LHD did not exist in the base game and was added in Rush Hour (only two highway interchanges existed in base game IIRC so it wouldn't have changed anything anyway) and the intersection overrides, pending the unreleased second and third expansions, was copied over and converted to all surface networks except power lines, including the unused Dirt Road, but not to Subway since Subway is supposed to be an abstract network like in previous titles. And the lack of LHD-specific Subway code is messing things up somehow. I'm honestly just guessing at this point, though.
EDIT2: I don't know how, but I did get the adjacent overrides to work once during my experiment with 5 portals (and somehow I got "Unsuitable grade for construction on a region with unmodified terrain)
And to clarify, the RHW-2 draggable tunnels are working fine, provided they're long enough. It's when I try putting two next to each other that the problems begin. I think the instability in this case might be due to the Subway's auto-connect (two facing stubs will automatically connect, though dragging across doesn't trigger it like with streets and RHW) and since the overrides are technically intersections something there may be triggering auto-connect unexpectedly.