
I glanced through the sources but couldn't find where the plain text provided to hover is being rendered. Seems that both are handled inside VSCode, but built-in preview is smarter than on-hover one.
It could be fixed in ReferenceHoverProvider.ts:57 by adding something like .replace(/^---[^]*?---/, ""). It fixed the issue for me.
On a tangent, the extension acknowledge links inside YAML, which is useful.