What does work works great. Smoothing on individual mesh elements is fine. No more ugly seams on arms and legs and such. But it won't do smoothing between different meshes or mesh elements - essentially, across seams in the UVW map.
It's only a problem depending on what model you're working on. Many of the armors are fine. Where their meshes meet, there isn't supposed to be smoothing, because there's armor or whatever in between the joints. The underwear models are particularly problematic, though, because they're meant to be smooth all over.
The issue also crops up on models that have... the nice word would be questionable, questionable UVW mapping. The Jal Shey armor and the Twin Sun models, for example, have faces on the UVW map that are isolated for seemingly no reason, on the pants. The original models get away with it thanks to the smoothing, but MDLOps loses that.
It should at the very least have been smoothing between elements that are in the same mesh.
Ah well, as long as a fix is in the works