Nice catch!
Are you saying they didn't used to overwrite your client seed each roll, and now they do?
I'm not sure it really matters. Even if they left your client seed alone they could still cheat by picking server seeds which play badly with your client seed. They still get to change the server seed to whatever they want each roll, right?
The only problem with the scam you suggest they're pulling is that it's exploitable by a smart player. If the site watches for patterns in your play (hi, lo, hi, lo, ...) and gives you rolls which deliberately make you lose, all you need to do is break the pattern for your biggest bets. If you just lost a bunch betting lo, then hi, then lo, the site will be expecting you to make a big bet on 'hi' next, so they'll give you a low number. So bet <50.5 instead. If they're trying to cheat you, you'll win.
It basically stops being a game of dice and becomes a game of rock-paper-scissors where both sides try to predict the other side's next move. The problem is one side is a dumb program and the other side is a smart human (that's you), so you should win.