I've booked business class packages on Expedia without this problem. So it can be done correctly.
I'm curious about this:
Coincidently only after they acknowledged their "system error" do they notify me the hotel rate they booked is over 2x the hotel's fully flexible rate had I booked direct.
So, "they" admitted there was an error? I think there's more to this story. Could you supply the missing details? What exactly happened when you complained about it? And how can you know the hotel rate is "2x the hotel's fully flexible rate" when the hotel is part of a package price?