I'm not sure if I can recreate this accurately... Was logged in as admin, created test account, refreshed confirmation page, template changed to default. Accessed admin area -- most links point to new subdomain (it appears that I'm logged in under the subdomain using the admin account). Manage to logout (this was a pain if I recall correctly) and login as admin through root domain... Blog title has changed to default and admin theme has changed to default.
I guess the easy solution is... Don't do what I did... But is this behaviour correct?