If you are using a variation on site definition like the smartphone variation, all links on the smartphone view are rendered as external (complete with host) links.

The reason for this bug is, that the SiteMergeFilter creates site proxies, if a variation is used. The equals comparison in the CompoundLinkTransformer fails on usage with site proxies. And so the link transformer creates external link for links in same site, too.

To reproduce this issue create a new home page and view the source code of the smartphone preview iframe.