Currently, even if the user knows the issue and removes the offending substrings in the posted Links, the post/comment still stays in moderation until a mod approves it.

When the user removes the filtered substrings (highlighted) in Links and re-submits the topic/comment, the item should go out of moderation and post the item normally.

This is correct and as per design. This stops people from trying to get around the moderation system. For exmaple, I could post something you dont allow. If it hits moderation and I know exactly what that item is, I can then edit and reword till I get around your moderation.