It's a related but definitely different to #11375 it seems.

The UI (app/views/puppetclasses/_class_parameters.html.erb and host_key_with_diagnostic helper) attempts to reverse LookupValue#value - which it expects to return a hash or array for a YAML parameter - in order to display it in the textbox. It does this essentially by calling LookupKey#value_before_type_cast(LookupValue's value) in the helper.

However it retrieves the list of LookupValues applicable to the host by calling Classification::ClassParam (via the value_hash_cache helper). In Classification::Base#update_generic_matcher, it calls LookupKey#value_before_type_cast so the value is actually the YAML string rather than the hash/array.

When this string is passed back, as above, it calls value_before_type_cast but with the YAML string, causing a second level of YAML in the textbox instead of the original one level.

Changing the behaviour of update_generic_matcher to get .value means further changes in the classification to ensure the ENC output still works (it attempts to type cast it again I think).

I'm seeing this issue in 1.9.2. Attached screenshots. The current workaround is making the parameter overrides in the Puppet Class > Smart Class Parameter page.