The easy 'fix' should be at least to change the documentation to reflect the actual behavior, so at least developers know what to expect, and this could be done right away. So instead of 'The item overlaps the other item by at least 50%' it should say 'The mouse pointer overlaps the other item by at least 50%'. I think that's what it's really doing.
The bigger issue is that neither of the two tolerance values is very useful for sorting. I think when you sort items the pointer position shouldn't matter. The problem with pointer position is that if you have items of different sizes and you use containment: 'parent', it can be impossible to reorder the larger one over the smaller one when the smaller one is the first or the last item, depending on where you click on the larger one. What should rather matter is the edge of the dragged item vs the other one.