That "suggestion" says nothing. There's one bullet preselected, but that doesn't mean, that AnyDVD knows or even thinks to know anything.
When that dialog pops up, AnyDVD wants your opinion, that's all.
It probably preselects whatever you may have selected in an earlier run (or what AnyDVD may have erraneously automatically selected).
But clearly: AnyDVD only says a disc IS region free (this would be displayed in clear words in the status screen, not in the popup), when that disc has no BD-J and the HDMV code in MovieObject.bdmv has no check whatsoever for the region code register.
Ok, I see what you mean. I can see how that may confuse users when such a pop-up appears with Region-Free is selected. Many would just OK it and rip it as is. Maybe it's worth considering that the pop-up will appear with a warning like "anydvd can't determine the region, please select...".