You want source? I have played this. Best example I ran into this, solo BT, the room just before Akama I pull all mobs, activate blade flurry, watch what happens. Don't use Fan of Knives, stand in one place so all the bodies pile up, and only use single target abilities, you will notice that bodies get hit and remaining alive targets don't. Usually around 5 or 6 alive targets and about 15 dead. I have ran into this enough to know its not bull. Test if yourself if you don't believe me.
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My source of this information is through gameplay. I just tested this again, just to make sure I was right. Pulled 10 Hozen in Jade Forest. After about 4 of them died blade flurry started hitting the corpses. You can tell not only from the lack of damage numbers appearing, but also you can see the blade flurry hit animation ON the bodies. Its like a slight red flash.
I know what I am talking about, and have posted this in bug reports with no answer or fix. Maybe if more rogues notice this (finally) and mention it to blizzard, something will finally be done about it.