Select a torrent, Local Files -> Delete -> as soon as the Delete button is pressed (firm confirmation dialogue) the torrent is removed from the list, on the next window (Confirm File Delete dialogue) if I cancel, the torrent doesn't get back on the list.

So it basically deletes the torrent from the list even before the user confirms the files deletion.

Is this default behavior? Any option for this (might have missed it).

Shouldn't it delete the torrent from the list ONLY after the user has confirmed to delete the files from the drive?

your logic seems logical to me but that is the current behavior.

a google search of the tixati site reveals a couple earlier threads on this topic.

http://forum.tixati.com/support/53/
http://forum.tixati.com/support/687/

The solution is apparently to un-delete the transfer (within 3 minutes) from the same button. This is still the behaviour in the stable 2.43