Vaal Molten Sheel Overwritten By Molten Shell

Yes, this is intended behaviour. Both provide the same molten shell buff, which can only be on the character once at a time, replacing any previous differences. They only differ in when the skill will remove that buff itself.

If this proves to be a serious problem in play, we could maybe prevent regular molten shell from being castable while a vaal molten shell is in effect, so it would fail rather than replacing? I'm not sure at this stage if there would be any unintended negative consequences of that.