I'm not able to reproduce this on my Joomla 2.5.16. I think this is actually a misunderstanding on how it is supposed to work. Let me explain:

• If the article is directly connected to a menu item (using the single article view), then the settings from the menu item take precedence over those from the article.
• If the menu item points to the category, or any other extension/view, the article options should have priority.

Thus to test this you have to create a menu item pointing to the articles category, and not to the article itself.
The actualy merging of the menu and article parameters is done in the view starting with this line: https://github.com/joomla/joomla-cms/blob/2.5.x/components/com_content/views/article/view.html.php#L61

Can you verify that? If the issue indeed exists please open a tracker on JoomlaCode (http://joomlacode.org/gf/project/joomla/tracker/?action=TrackerItemBrowse&tracker_id=8549) and reference it here.

@Bakual You are right. I was not aware that the menu item preference takes precedence. If you ask me, the user interface is quite misleading on that point. There should at least be some kind of visible notice that the options will not have effect as long as the article is pointed to by a menu item... But I suppose that's a different issue.

Thanks for clearing things up.