create table t1 (a int);

create or replace table t1 (a blob, index (a));

after the above the table t1 does not exist. But after

create table t1 (a int);

create or replace table t1 (a decimal(200,100));

old table t1 is preserved.

The latter behavior is correct, after create or replace the table must always exist. This can be fixed either the alter table way (create temporary table, rename it over the old one) or by deleting the old table only after all validity checks for a new table have passed.