It works that way for me also. But this is a 'damned if you do, damned if you don't' issue: if you don't select all of the spells you can learn, you can't complete leveling up. It is possible to learn so many spells from scrolls that you can't learn any new ones on level up. So if you removed learned spells from the list, you could get an issue where level up is blocked.
Not to say there aren't fixes, e.g., dimming out known spells but keeping them in the list, but I see why the programmers went the easy route in the first pass.
I am running a wizard with 7 cantrips, 24 first level spells, and 15 (approx.) second-level spells thanks to the ability to learn spells from scrolls, so I have run into this limit. This is a case where I would like to ditch a first level spell to learn an extra cantrip, but alas, not (currently) possible.