Target Dummy projection have collision
Apparently projected Target Dummies do have collisions.
On most recent Splitsie's creative stream he ran into same issue. I was able to replicate that on my end playing also on survival server.
This is link to his stream so you can see video of how he found out and couple tests he ran later:
If you take a blueprint of dummy, with body already spawned, then its projection will have collision, but only the body part. It will stop particles, bullets, player and smallgrids. Largegrids are not affected.
Once bugged projection start intersecting with grids game crashes frequently.
It is actually quite dangerous bug as its ground for some exploits or intentional crashing servers.