Replication of mysql schema - Replication stops when a user is altered

Reported by a customer

2 UM, 2 PM system with local query. Replication stops when a user is altered from UM1. A simple grant to a user on UM1 will stop replication to the other servers with these errors:

Slave_IO_Running: Yes
Slave_SQL_Running: No
Last_Error: Error 'Can't find any matching row in the user table' on query. Default database: ''. Query: 'grant select on test.dairy_comm_pred to ro_dairy'

First, this user, along with others, are intentionally not on the other servers of UM2, PM1 and PM2 as they do not need to access anything from there. Second, the rsync command for replication also excludes the mysql dir, so shouldn't this also be skipped over when replicating?

rsync -vopgr -e ssh --exclude=mysql/ --exclude=test/ --exclude=infinidb_vtable/ --exclude=infinidb_querystats/ --exclude=calpontsys/ --include=/ --include=/* --exclude=* $INSTALLDIR/mysql/db/ $USERNAME@$SERVER:$INSTALLDIR/mysql/db/

I believe this could be set as a variable in Replicate_Ignore_DB=mysql