It does, but it’s kinda clumsy and it’s simply a constraint of how the sequence is working with velocity intrinsically
If you use the encoder with Mod Wheel and breath, you can see that the encoder becomes a proxy controller
If you do the same with velocity, well, it’s awaiting notes, but those notes have velocity set (this may be varied or default 100) but the fact is that the velocities are set and if you vary the track velocity (or input velocity from a keyboard) you will audition the effect
so what’s the point in retaining the line that encoder will affect it - it’s because it’s doable, but clunky, i.e. it’s the best you’ll get for a feel for what’s happening albeit it is not anywhere as useful as MW e.g.
Just vary the velocity quickly enough that you change it as a note is struck, or play lots of notes, or play long notes and the effect of velocity is momentarily superimposed onto the sound that’s started - it’s offering a hint of what’s happening, at best, as soon as another note comes in the encoder is reset to audition at the notes’ vel level, so to get a feel, it’s best to have long sustaining notes
I can see why the info would be left in, but I do follow the confusion it can bring as it only works (at best) conditionally - I don’t think there’s an obvious neat way to improve this encoder auditioning as it needs to listen to incoming notes