Function `diag` results in error when subsetting

[v-hol]

Any attempt to subset a matrix using diag gives the error "replacement diagonal has the wrong length."
Investigating with breakpoints shows that the error occurs in Rsh_SetterCall, specifically the Rf_applyClosure call in the CLOSXP case.
When cating the value without setting it, the value shows without issue.
Test to reproduce error:

    x <- matrix(4,2,2)
    diag(x)[2] <- 5