https://gfycat.com/ViciousExaltedGermanshorthairedpointer
What should happen:
-Rope appears (correct)
-Nothing else changes
What happens:
-Rope appears (correct)
-Character flips upside down (incorrect)
-Complete loss of control over character (jumping, WASD, nothing works) (incorrect)
What fixed the issue:
Rope was originally spawned in CFrame of character torso with size (1,1,1), before being correctly positioned/sized later (just for an instant).
Spawning it in the correct position (outside character) from the start prevents the bug from happening.
The rope is anchored, cancollide=false. Rope is not welded to character.
Control loss means jumping + WASD do nothing. If character tips over, control is regained (not sure if tipping over is what helps, or if some external factor allows tipping over and also allows control regain). If character manages to remain on head, control is not regained until some external force pushes character over (such as selection animation of some tool). Removing the rope or deselecting the rope tool does not stop issue.