Text boxes behave as if they have a fill and as a result are entirely selectable. In this example, the only way to select the pink stroke would be to use the command+click option to "select behind" (which never seems to work first try) or to move the text to a lower layer.
From a technical standpoint, the size of the bounding box makes sense since it takes in to account all of the descenders, ascenders, accents, and default minimum line height for the entire font, so I have no issue with the physical size. It's the simple fact that empty portions of the text frame should not interfere with selection when there is literally no vector artwork present.
In the preferences, there is a check box under 'selection and anchor display' for "object selection by path only." This ends up being a pretty tricky way to work since it's effectively outline mode, but there's an obvious logic as to why a user might want that ability. I am BEGGING Illustrator to add a similar preference (or even default behavior) for "text selection by character only." Obviously, the outer path, anchors, and handles would still be selectable.