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FYI: This lack of functionality was noticed because of the following public forum topic:
The OP in that thread seems to be happy with the 2 models inserted into a new model as component instances. However, there might be times where it could be advantageous to explode a component instance and then purge the definitions collection.
Scenario 1: Building a combination component (as in the linked forum topic.)
Scenario 2: Removing an unneeded nesting level from a component model, which is preventing a SKP file from acting as a properly insertable dynamic component file. (I actually have a customer at this time, whose entire updated product library has this very problem.)
And again we find exploding is needed ...