To be honest - that's not a hitbox issue. That's a queuing issue. Wukong activated his Decoy in the same tick that he was hit by Rocket Grab, meaning that both happened. It's the same interaction as when Tristana uses Rocket Jump at the exact same time she's hit, and she ends up stretching his fist over half a mile. Two abilities resolve at the same time. The distinction here is that "move blocks" (dashes and airbornes) interrupt each other - so whereas Rocket Jump cancels Rocket Grab, Decoy doesn't.
The "weird hitbox" is a compound issue, but it's primarily caused by Decoy.
- Blitzcrank's returning fist always locks itself to the center of characters that it's hit - so there's the abrupt transition from clipping you on the ass to suddenly being in the middle of you. This isn't usually as visually jarring as shown above, but that's due to the second issue:
- Decoy "pushes" Wukong forward - like a mini-dash, except it's not classified as a dash to trigger the same interaction as Rocket Jump. I've seen Wukongs use Decoy to dodge a Lux ultimate even while rooted, because he gets moved one-Teemo away even though he's suppose to be immobile.
If Riot changed the "grab" to instead move the target to be in-line with the fist, instead of the other way around, it would probably resolve a lot of the visual issues. Even if they did "improve the visuals" with a width-indicator (like Pyke's Drowned Undertow), this particular interaction would have still happened - because it's Decoy's fault, not Rocket Grab's.