I was observing an NPC in a Capella named something like Kaz Vitosn in Jallik E-15 around 16:08 UTC.
I noticed that it's distance to me, when targeted, fluctuated between 0 and what I assume was its actual distance. This fluctuation was visible in the official current target indicator in the upper-right, and in my target list plugin. I did not check the sensor log.

Plugins were loaded, at the time of this observation.
I removed all plugins and waited for another Capella to fly though, but it did not present the same issue.
I reinstalled all plugins again and waited for another Capella. No distance issues were observed.

EDIT:
This was again observed at about 16:29UTC, same location. NPC named Reem Raka.
Plugins still installed.

I've observed a few more Capellas without plugins since positing this and I haven't seen it happen again. The odd things about it, though, is that I've only observed it with Capellas and when it happened it also affected the default UI.

Thanks for this. The devs are likely to be interested if the issue happens without any plugins loaded.