Both branches are executed and the result merged, in single basic block fashion, which the code coverage tracker doesn't understand.

OK, sure. That could be fixed at the code coverage level - you're looking for something along the lines of store the select mask (as opposed to the bit branched on).

Could report it in similar fashion to the mcdc coverage, would look a bit like check each bit in the word is set or clear on some execution. Probably a reasonable extension to implement.