I think this should maybe be a BUG as the transition screen cannot work correctly without it?

This is not a bug, as the comment criteria you are currently using does not mean commit message.

Is there then another method to move a issue to an intermediate state like (in progress ) and then move it to closed later without the close issue taking precedence? This is our current workflow which we are waiting to automate but can't achieve.

All transition rules will be checked and run if applicable. If you do not want issue to be closed upon commit, just remove it.

State changed as code fixing the issue is committed (b4ad529e)

State changed as build OD-6562 is successful