From my take... The OP is confusing focus assist "magnification" with actual zoom.
OP, the Panny's assume that when you turn the focus wheel you are focusing manually. It assists this by zooming into a small area digitally for critical focus on the display. This doesn't mean that you are actually zoomed in at that point optically. The picture is still taken at 45mm or whatever the lens is currently set to. In other words, this "magnification" mode simply allows you to see minute detail easier to focus critically.... its not a digital zoom of sorts.
What you are describing is normal operation. There is an option in the menu to turn off this feature if it is adding confusion. Its clearly stated in the manual.
PS> Very few people here are familiar with micro 4/3 cameras (Panasonic Lumix G1, G10, G2, GH1, GH2, GF1, GF2 and Olympus E-P1, E-PL1, E-P2, E-P3, E-PL2, E-PL3, E-PM1) or any mirrorless cameras. Ron's link above is a better resource.