Previously discussed here (and maybe other places too).
By definition, an obscuring rectangle should contain the true location of an observation. However, if an observer has used a large accuracy circle, the obscuring rectangle can and often does fail to include the true location. As a hypothetical example, I observed a squirrel in the bay area. I entered it with a large accuracy circle that does include the true (terrestrial) location. I then obscured the location and got an obscuring rectangle that pretty clearly does not encompass the true location.
One solution already suggested was to not use an obscuring rectangle if the area given by the accuracy circle is larger than the area an obscuring rectangle would have since the user has essentially already obscured the location.