in-hole within #:refers-to causes contract violation

The intention of this program is for the scope of a define to be its entire surrounding context.

#lang racket

(require redex/reduction-semantics)

(define-language L
  [ x ::= variable-not-otherwise-mentioned]
  [ e ::= x natural ]
  [ s ::= (begin s ...) (define x e) e]
  [ S ::= hole (begin s ... S s ...)]
  #:binding-forms
  (in-hole S (define x e) #:refers-to x)
  )

(default-language L)

(test-equal (term (define foo 5))
            (term (define bar 5)))

(test-equal (term (begin (define foo 5)
                         (define bar 10)
                         bar
                         foo
                         ))
            (term (begin (define bar 5)
                         (define baz 10)
                         baz
                         bar)))

I'm not sure what I expected the semantics of this to be, but the error message should at least be different:

car: contract violation
  expected: pair?
  given: 5
  context...:
   /home/mburge/work/vendor/redex/redex-lib/redex/private/binding-forms.rkt:654:4: loop
   [repeats 4 more times]
   /home/mburge/work/vendor/redex/redex-lib/redex/private/binding-forms.rkt:651:0: rec-freshen-spec
   /home/mburge/work/vendor/redex/redex-lib/redex/private/binding-forms.rkt:184:0: canonicalize
   /home/mburge/work/vendor/redex/redex-lib/redex/private/binding-forms.rkt:152:0: α-equal?
   /home/mburge/work/vendor/redex/redex-lib/redex/private/reduction-semantics.rkt:3165:0: test-equal/proc
   "/home/mburge/work/tmp/a.rkt": [running body]
   for-loop
   run-module-instance!125
   perform-require!78

Reproduce the example with test-equal and inspect redex/private/binding-forms.rkt, especially rec-freshen-spec and loop, along with redex/private/reduction-semantics.rkt. Trace how the #:refers-to binding form handles the in-hole context, then verify that the example reports a meaningful error rather than a car contract violation.