I've noticed that if I stand just within max range of reaching a block, my tools will break it faster than normal. Is this a bug of some sort, or an intended mechanic? (by just within range I'm about 1\4 of a block, no more, from being out of range of reaching the block)
It doesnt ALWAYS work but 90% of the time it does. I've managed to do it with Diamond and Iron Pickaxes and Diamond and Iron Shovels. (I havent play tested every quality tool but I have no reason to think its the quality of the tool that matters)
I've managed to break stone, ores of all quality, netherrack, soulsand and dirt this way. I havent tested it against other blocks but it may apply to all blocks.
To Duplicate:
Try taking a diamond shovel, and break a dirt block (note the time it takes) Then break all the dirt blocks in a line that you can reach, and walk foward just a bit to be in range of the next. Then click and hold and walk foward at the same time. You should be able to break dirt blocks as fast as you can walk. (which is faster than you should be able to) This seems to be the easiest way to reproduce the situation. Note that dirt blocks with tall grass on them seem to not work for this (Bug?)
Best Answer
After a bit of testing, I think I have determined the cause of this bug. It actually has nothing to do with how far away you are from the block. In fact, it seems to have something to do with a bug in Minecraft which has been fixed known as "click mining".
When you mine a row of blocks the "normal" way, standing directly in front of them and holding forward, the system works properly. Say you're mining a row of dirt blocks with a diamond shovel. There is a small amount of delay between each block's destruction and the next block destruction's beginning. If this is hard to understand, basically the arm has to swing back up before the next block can get hit, so there's a small amount of delay.
Someone discovered this and introduced "click mining" to the scene. All you did was release/repress the mouse button after each block was destroyed. This instantly returned the arm to the "unswung" position, eliminating the delay between each block's destruction. Notch figured this out and introduced a small delay after you press the mouse button down, so it negated the time advantage of click mining.
However, when doing the method you described, the block is broken before you're in range of the next block. So really, there's a small period between each dirt block where no block is in range. This instantly returns the shovel to the unswung postion, so there's no delay between blocks. The click mining fix only adds a delay after mouse presses, and this is not a mouse press, you're just holding it down, so there's no delay. Essentially, you've found a way around the click mining fix.
As for tall grass, it still works with grass on top of it. However, you must be aiming for the bottom of the block, because if the tall grass gets in range, the swing delay is reintroduced, leaving you with the delay again.
Long story short, yes, it's a bug. Still, it's sorta useful in select situations, but those situations are rare, so it's not a really big problem.