Very simple to reproduce: Follow the guide here. Now connect a PPPoE client to eth0 of R1 and a PPPoE server/AC/NAS to eth0 on R3.
PADI packets from the client at Site A are not forwarded to the server at Site B. More specifically, R1 does not forward the PADI to R2 -- I inserted a switch between R1 and R2, spanned the ports, and captured to be certain.
Other forms of broadcast traffic seem to pass just fine, including ARPs. ClientA can ping ClientB when both have IP addresses, so we know VPLS is working, but for some reason the PE is intercepting the PADI packets.