Blocks do not show as broken after they have been removed however they are able to be walked through and an outline of the block behind will show.

 When using any form of fast tools block lag happens very frequently,

 For example mining Netherack with an efficiency 5 pick. Or even just digging sand with a diamond shovel.

Has happened once where I have been strip mining in the nether and the block lag happened and I left the game, upon returning I was trapped inside blocks and started to suffocate.

This is also on a single player world so it's not a connectivity issue.