Gdal2tiles issue when using -z for specifying zoom lvls in raster profile

Everything works fine when not using -z. But using -z and only wanting 0-1, i run into an issue that is best illustrated as below.

C:\python\WinPython-64bit-2.7.6.4-gdal\python-2.7.6.amd64>python gdal2tiles.py -v -p raster -z 0-1 "/vsicurl/http://ift.tt/1HDHjWJ" out

('Options:', <Values at 0x3ce19c8: {'profile': 'raster', 'kml': False, 's_srs': None, 'copyright': '', 'resume': False, 'url': '', 'googlekey': 'INSERT_Y
OUR_KEY_HERE', 'bingkey': 'INSERT_YOUR_KEY_HERE', 'webviewer': 'all', 'zoom': '0-1', 'resampling': 'average', 'tmscompatible': None, 'title': 'image.JPG'
, 'srcnodata': None, 'verbose': True}>)
('Input:', '/vsicurl/http://ift.tt/1HDHjWJ')
('Output:', 'C:\\dev\\stockpile_ground1')
Cache: 40 MB

('Input file:', '( 4608P x 3456L - 3 bands)')
NODATA: []
('Preprocessed file:', '( 4608P x 3456L - 3 bands)')
('Bounds (output srs):', 0.0, -3456.0, 4608.0, 0.0)
('Native zoom of the raster:', 5)
Generating Base Tiles:

Tiles generated from the max zoom level:
----------------------------------------

('dataBandsCount: ', 3)
('tilebands: ', 4)
(1, '/', 2, 'C:\\dev\\stockpile_ground1\\1\\0\\0.png')
('\tReadRaster Extent: ', (0, 0, 4096, 3456), (0, 40, 256, 216))
(2, '/', 2, 'C:\\dev\\stockpile_ground1\\1\\1\\0.png')
('\tReadRaster Extent: ', (4096, 0, 512, 3456), (0, 40, 32, 216))
Generating Overview Tiles:
(1, '/', 1, 'C:\\dev\\stockpile_ground1\\0\\0\\0.png')
('\tbuild from zoom', 1, ' tiles:', (0, 0), (1, 0), (0, 1), (1, 1))

It seems to be cutting out the correct extend from original, but it scales it wrong in the output images.

Is this intended, or can it only be used to generate lower lvl tiles when the base layer has been generated?