Nested families do not display properly in the project environment floor plan because Revit does not cut them at the correct view cut range.
Attached is a simplified example project file showing what I am talking about.
The window family has a nested frame family with multple instances. The nested frame family is of the Generic Model category so that the instances can be joined together within the window family (the window category does not allow this).
The problem I am having is that the nested family looks correct in the family environment floor plan, but when loaded into the project environment, the nested family does not cut properly in the floor plan view:

It looks like in the Project Environment, the nested family isn't being cut by the view range and instead is showing the plan view from above the frame so that the side jambs can't be seen.
Per this documentation from Autodesk: I have ensured that the cut planes are all set to 4' in the project, window, and the nested family so the nested family should be cut properly in the project environment.
Here's the elevations in each environment:

The only way to fix this behavior is to:
- Option A, get rid of the nested families and model all geometry directly in the host family
- This is not ideal for complex families with repetive geometry because the host family becomes too convoluted and difficult to maintain
- Option B, make the nested families shared families
- This makes the nested families appear correctly in the project environment, but also pollutes the project family browser and schedules with all the shared families that really don't need to be shared or scheduled (not to mention slows down Revit).
- Option C, hide the nested family geometry and create 2D elements that show what you want
- This is obviously poor practice for BIM environments that should be natively 3D
It really is suprising to me that Revit doesn't support showing nested families correctly in the project environment floor plan even though their assigned category is cuttable by the view range. This seems like a massive oversight for BIM family management.
Window Project Example.rvt