It works, at least most of the time. It's a nice patch to make power ups appear in front behind of blocks without giving the block more priority.
The reason I wrote "almost" is because it might cause OAM glitches. Specifically, SMW reserves only one OAM tile for sprite slots A and B each which is usually reserved for power ups (this don't happen if the power ups are spawned in a later slot but for that, slots A and B have to be filled in the first place).
You can 'fix' this by installing NMSTL but have to have it activated all the time (at least whenver power up blocks appear) because NMSTL causes the sprites to reserve OAM slots variable instead of hardcoded.
It fixes a usually uncommon visual glitch, namely that items from item boxes goes behind the foreground (easy preventable, hence why you can say it's "uncommon") and in certain level modes even behind the background (usually due to using special effects like transparacy, also less common than the former).
I believe it's a good idea to disable layer 1 when you spawn an item and see if there is a used block when the item pops out of the block. If there is a used block, the patch works as it should.