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The bug has already been fixed for the upcoming release.

Was just going to report the same. The bug seems to work like this:

When you first choose a difficulty level upon starting up the game, Lo Wang will always say "Who wants some Wang" regardless of your choice.

But when you start up a new game (without exiting the game), Lo Wang will say the difficulty which you had previously chosen.

It seems that the speech Lo Wang gives when choosing the difficulty of the game is random. For example when choosing "I have no fear", Lo Wang will often say the wrong one and say "Who Wants Some Wang". This does not happen in the original or other source ports.