I frequently run into this problem on the Wikimedia phabricator. I am unable to add someone by the username of "Peter" in the interface without knowing his display name, too. (His display name is longer, but `@`-username is just Peter).
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Given the system appears to **mandate** that I select from the list, it is vital that more than 5 options are available. And that these include the top 5 matches on both display name and username (e.g. 2 * 10 = 20 options in theory). The dropdown could be made scrollable perhaps.
But at the very least it should include the exact match for username or display name (if any) no matter what (Even if it that means it have to take the place of one of the other 5).
This is especially important because unlike the systems that this design is inspired by (e.g. e-mail clients "To" and "Cc" lists), there is no fallback for entering plain text. The system mandates that I select an option. It shouldn't do that unless it's confident enough it's can cover all use cases.
I did try plain text entry:
1. Type "Peter"
2. Press Return
This ends up adding the first peter on the list because suggestions feeds into pre-selection, which is what "Return" is hooked into. This happends regardless of any cursor or arrow-key behaviour. I also tried pressing the "up" arrow into -1 to possibly force text as-is (via a confirmation lookup perhaps), but no such thing exists either.