Hold in mind that the Enable Caps Lock is only for the touch keyboard. It enables the double tap of the Shift Key to turn on Caps Lock. On smaller iPads this shows as a different icon and highlighting of the shift key. On the 12.9 inch iPad it toggles the actual Caps key (shown by highlighitng).
I'm guessing the only reason it's there on the 12.9" iPad is for the people who are used to double tapping the shift key.
The setting has no effect on physical keyboards. Not even Apple's Smart Keyboard. If this is what you are talking about, it's not a bug, it's by design.
If you are talking about something else, please provide more details.