Yes, this is done intentionally. There is a check in the script (the “isCSSOn()” method) that tests the computed display of the first link in the menu tree and when it’s not “block”, the script assumes CSS is disabled in the user agent. And in that case the script prevents handling events (e.g. focus, mouseenter, etc.) so that accidental JS errors are not produced.
So basically in the current code it’s always assumed that the menu item links will have “display:block” applied (this is set in the core CSS and it’s not recommended changing anything there since it might break some script feature).
And this brings the question why exactly do you want to set “display:inline” to the menu item links? I mean is there something you can’t achieve when “display:block” is used?