I was making stuff (table cloth I think) that used linen. I left that window open, took my two remaining linen to go build a fancy chair (thanks for those btw). I had all materials in my inventory but linen was still highlighted for tablecloth recipe. Started building the chair, used up boards, blocks but stopped short of completing the chair saying I didn't have any applicable materials even though the linen was in my inventory. I had a hunch that the open recipe was the issue and sure enough when I closed the dialogue for the table cloth and the linen was no longer highlighted, I was able to finish the chair. So it seems that, at least in this case, the highlighted materials were completely blocked off from being used by other construction.
It's possible that this is by design because it solves some problem that I don't know about. But it doesn't quite feel right so I think it's a bug.