Guess the output of this program.

Is this three Delphi bugs for the price of one?

Compiler mentions: 

[dcc32 Hint] WeirdCaseConstruct.dpr(11): H2077 Value assigned to ‘Handled’ never used

1. If statement inside case – after ELSE option?

2. Handled is actually used

3. else Test(4) is never called

#wtf  XE7.1 (32-bit, Windows)

program WeirdCaseConstruct;

{$APPTYPE CONSOLE}

{$R *.res}

uses

  System.SysUtils;

procedure Test(const Value: Integer);

var

  Handled: Boolean;

begin

  Handled := True; // <- Hinted

  case Value of

    1: writeln(‘One’);

    2: writeln(‘Two’);

    else Handled := False;

    if not Handled

     then Writeln(Value, ‘ is unhandled’)

      else Test(4);

  end;

end;

begin

  Test(1);

  Test(3);

  Write(‘Press Enter’);

  Readln;

end.