We're seeing that when "watching" a query using the cache and network policy that we don't receive any sort of error/exception if we don't have a network connection. The cache will return properly, but we'll never receive any sort of emission or exception to catch for the network call. If we do just a network call without cache then everything works as expected, but we're obviously not "watching" at that point.
What we're expecting is that if a device loses network connection that it would collect the cached value and then throw an exception when trying to pull fresh data from the network. Is that the intended behavior?