Wow, I had not considered the grinder. I did test and succeed in upgrading it with the upgrade station. The ice shield is basically a spawnable metal shield with a custom skin, so that explains why you would get so much from it.

Edit: Also thank you for posting the configuration you are using for it. I spent a lot of hours customizing my server to reduce the progression towards later tier content and this exploit would have completely canceled out all the work I did haha.

This should be fixed in the next patch. Thanks for reporting this!