I've known for awhile this was always thing, but I can't seem to find any reason for it being so.
It looks like it hasn't been a huge issue in gameplay since I also can't find any suggestions/previous reports on it, probably why it got largely left alone.
But it doesn't make sense for the Magic Hoe to not be able to till dirt/grass block. The only right-click/use function of the hoe is to till for farmland, it doesn't interact with anything else in vanilla. I think it would be ok to allow it and it shouldn't interfere with the Magic Hoe's main magic function (auto-replant) since that requires breaking crops (left click or break function)

 

This will be fixed after our next maintenance.