This is expected behavior.
The issue is due to how MATLAB Report Generator 2.x creates chapters and subsections. If the report setup file does not explicitly define chapter components, then it assumes that the entire report is contained in a "Section 1". All of the sections nested in "Section 1" become sub-sections, which explains the difference in text and paragraph formatting.
To work around this issue, perform the following steps:
1. Open test_format_stub.rft in MATLAB Report Generator 2.3.1 (R14SP3).
2. Right-Click on "Report - test_format_stub.rpt" and select Send to Workspace.
3. Enter the following in the MATLAB Command Window:
ans.SectionType = 'book'
4. In order to preserve this change, save the file. Note that this format is not recognized by the older MATLAB Report Generator 1.3 (R13SP1), you should use file menu option 'Save As...' to create a new file name.
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