I think the 4K part is a mild red herring here. I think the Maximum part is what applies.
When there aren’t bandwidth restrictions, the result should be the best quality/resolution available to that device.
I see the same thing on an ATV HD w/ a 720p display:
If the VC1 file is 1080p, it transcodes down to 720p for the display.
If the VC1 file is 480p, it transcodes to 480p.
Matching what @BigWheel said, I’m pretty sure Plex on the ATV HD has never played VC1:
