Thanks to JENKINS-17818 when a relative path is specified for Custom Workspace the resulting workspace path is relative to JENKINS_HOME instead of the default workspace location ${ITEM_FULL_NAME}/workspace as I had expected.

The consequence of specifying a relative path of .. for Custom Workspace is that the workspace is set to ${JENKINS_HOME}/.. which Jenkins attempted to wipe out when commencing the Job.

End result is apparently much the same as seen in JENKINS-9806, dozens of jobs configurations, workspaces, build logs, jenkins credentials, ssh keys and so on all recursively deleted.