This doesn’t seem to work for condensed instruments.
non-condensed staves
Condensed divisi.
As explained here by Daniel (and if I understood correctly) this option now works only for ties between noteheads and not for ties above/below.
So, for the chords (including condensed music, apparently), it will only work if it’s set to “All between Noteheads”
In your example with the vln 2 harmonics, I think it works because the F and G ties in the top staff will be anyway “between”, whatever your setting is. So they create the additional space and everything else follows:
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It creates a situation, as in my example, where ties above/below are shorter than ties between noteheads.
Logically, this behavior makes no sense: You don’t allow ties to be too short (let’s say, <= 2sp) at the beginning of a system if they are positioned between noteheads, but a tie above/below, which is shorter than this value, is supposed to be okay?
@dspreadbury please reconsider.