Initially I thought that yes it seems like it should be GP2 because GP1 at level 50 + GP2 sounds like it should result in a GP2.
However, after looking over the FAQ I couldn't quite pin down this situation. The closest the rules come is:
From the FAQ: If parents have a difference of 1 grade of Genetic Power, the child will get the higher grade if it has inherited 7 or more dominant genes from the parent with higher grade.
Since the parents have a GP difference of 1, it seems like this rule applies.
Because the baby has 7 dominant genes from the father, it inherited GP1.
Admittedly that doesn't really seem FAIR since the father is GP1 + level 50 (which should count as GP2 for breeding anyways).
So I'm going to have to say, not a bug, just a somewhat crappy circumstance that might need to be changed.