From what I know, routers do not forward packets from/to address of the range 169.254.x.x That being said, after exchanging a router "tracert 169.254.0.1" did in fact find a route with 13 hops. I'm not sure what to make of this.
Your computer is missing a route for 169.254.0.0/16. It's a perfectly legal address range as far as routers are concerned. It's up to the host to define it as a link-local scope. (or the network admin to null route it, where appropriate.)
That said, a modern router should be aware of RFC3927, Section 2.7 and have 169.254/16 as a link-local subnet. Routers must drop any 169.254/16 destination. However, not all comply.