Some time between D11737 and today, this stopped working (or perhaps it never worked and I got things wrong in D11737). I think this actually ended up not mattering for us, given the way Phacility auth was ultimately built.
This feature generally seems reasonable, though, and probably should work. Make it work in the "password" and "oauth" cases, at least. This may still not work for LDAP, but testing that is nontrivial.