hope I'm not too late. I think I finally figured this one out! Or at least an useful workaround.
The problem is that UE4 understands the first Object in the exported FBX file as a bone even if it isn't even a bone. In this case UE4 thinks the "Armature" object is the root bone called "Armature" and that your "root" bone is a second bone attached to that first one.
My solution was to just remove my root bone, and rename the Object "Armature" to "root" in Blender.
For example, if you're making a rig following the official UE4 Mannequin model, it will look something like this:
In Blender, you go to Object Mode, click the Armature, click the Object Data tab (selected in the picture) and rename the Armature to "root". On the Outliner you'll see that "root" is the first object, that's the name of the Object data-block and in UE4 that will act as it's your root bone. Then comes another object called "Armature", that's the name of the Armature data-block, you can change this name clicking the Armature tab, but from my testing that makes no difference to UE4. Then comes the actual first bone, the "pelvis", not the "root", which I deleted.
Using this setup with Blender 2.77 and UE 4.11 and I was able to successfully export the Character, import it to UE, and retarget the default animations to it.