The game code works more like A (it bugs out and the object bounces off the portal surface, but it uses a world-fixed coordinate frame that would match A for behavior).

Ah, I see what you are saying. They apply the velocity of the object again after teleporting rather than the difference between the velocities of the portal and the object. Thus the velocity of the train would be ignored. Well, B is wrong simply because the game engine doesn't rotate characters in the teleport because that would ruin character physics. So B is wrong twice.