Yes there is no magic, market order is market order. If instrument is illiquid in that moment for your order, then you can get bad price. So on the day NSE went down and brokers did square off after normal time in special session, i think we had some bad prices for some people.
Otherwise practically, this never really happens for me in liquid stocks with reasonable order size ( and so NF/BNF should be even better) - but i prefer to be safe and use a limit price ( ahead of ltp) to exit x minutes before autosquare off. This also saves on square off charges. Must keep large distance from LTP to limit price to avoid getting slipped.
It would be good, If Zerodha place a limit order in auto square off. Limit price should be far from LTP, but realistic. It may not have happened so far, but it can happen.