No, it's just a simply bug. It has lot of other bugs, also.
I know the author of that prog.
But version 2.0 does the import perfectly. Available only here:
www.kinox.org/zelda64br (Majora's Mask download section) - but this site
temporary down. Also v2.0 available at my site:
http://zelda64rus.dotnet.lv ("How to" section).
This proggy works only with uncompressed graphics, which can be found
in ROM with the help of "Sprite Viewer" utility.
I succesfully use n64gfx for translating Zelda: Ocarina of time into russian,
so I need to change all fonts, items names, etc - and reinsert it back to ROM.
Also n64gfx works good with *.dat files, maded by "Zelda Extractor" utility,
for editing compressed graphics in Zelda.
Just check screenshots at my site to see what is possible.
(site is in russian, but don't be confused - all menu is in english).