The behaviour of managing permission limitations based on subtree should be changed.

Current behaviour (in 1.7.5):
1. Create content structure, for e.g.: /Home/Folder 1/Folder 2/Folder 3 (as location ids: 1/2/55/56/57)
2. Set permission limitation, for e.g.: content/edit to subtree 1/2/55/56/57
3. Remove Folder 3 (location id: 57).
4. Previously created permission limitation is still the same: content/edit | 1/2/55/56/57

Current behaviour (in 1.12):
1. Create content structure, for e.g.: /Home/Folder 1/Folder 2/Folder 3.
2. Set permission limitation, for e.g.: content/edit to subtree /Home/Folder 1/Folder 2/Folder 3.
3. Remove Folder 3.
4. Previously created permission limitation will be: content/edit | /Home/Folder 1/Folder 2
5. In fact, (you can check in database table ezpolicy_limitation_value) limitation is still set for Folder 3. There is another ticket for change it in Platform UI.

In legacy, 5.4.x, behaviour was a bit different. When you removed the location on which permission limitation was based, then this limitation was automatically removed.