My guess is that it works around the per-scanline sprite limit by continuing evaluation as if the graphics chip had all the time in the world to locate and potentially overlap sprite pixels and was consequently built with a 64-deep evaluation.
That's exactly what it does. The function is hooked up correctly on the Mac side and is passed to the Nestopia core, so it certainly should be working. (I have previously put out releases with preference items that didn't work, but not in this case). I can't really advise beyond that.