
So, after quite a bit of frustration, I've found the root cause and a workaround.
Yes it is a bug in Office and it relates specifically to the use of HiDPI monitor resolutions also known as Retina Display on the Mac.
The answer provided by Bryan G is correct, except that the reason why it worked for him at 1920x1200 was not only because he changed the resolution, but because the native resolution he used (1512x982) is the retina display resolution of his MacBook, whereas the 1920x1200 is a scaled resolution that does not use HiDPI.
I am working from a 2 screen setup and my primary screen can do both hidpi and scaled resolutions. My main resolution is 3008x1692. When I use that resolution in HiDPI mode, I get the bug. If I use that same resolution in non-HiDPI mode, then the smartart box displays properly. The trade-off of course is that that non-HiDPI mode is a bit more blurry on the eyes.
How to switch to a non-HDPI resolution?
Go to System Settings->Displays, click Advanced... and activate "Show Resolutions as List" and Click "Done". Then on the Displays control panel, toggle "Show All Resolutions" (at the bottom of the list). When you do that, you will see some resolutions settings duplicate, and one of the two will have "(low resolution)" after it. Those are the ones you can use to show the smartart box properly.