Billing block is hidden for pay later even if "Billing address required" is checked

The 'Billing address required' checkbox behaviour doesn't seem to work. When selecting this box we would expect that the billing address fields are still exposed to users to fill in. However, even if this checkbox is ticked, selecting the pay later option hides these fields but still makes them required to fill in so users cannot get past the initial registration page.

Replicated on demo:

• Event: Test for billing block pay later
• Registration page: http://d46.demo.civicrm.org/civicrm/event/register?id=7&reset=1