Something I found in the code:

in mongoid/persistence.rb

def _remove(options = {})
if Remove.new(self, options).persist
self.destroyed = true
cascading_remove!
end; true
end

in mongoid/paranoia.rb

def _remove(options = {})
now = Time.now
collection.update({ :_id => self.id }, { '$set' => { :deleted_at => Time.now } })
@attributes["deleted_at"] = now
true
end

Paranoia#_remove doesn't trigger cascading_remove!, ergo any associated documents are not "deleted" when deleted documents using Mongoid::Paranoia