The behavior is as expected. The lists documentation says:
The sequence
\;does not divide a value but is replaced by;in the resulting element.
The original \; in your string() call encodes \; because the escape sequence documentation says:
A
\;outside of any Variable References encodes itself
Historically this evolved in the very early days when someone said “I need to escape a ; for this specific use case” and implemented the \; behavior without considering the semantics in general. Due to compatibility, it cannot be changed now. A policy for this would have a huge runtime cost.