Tried it for the sake of hiding extensions - hate them, too much like Windoze for me, and am sick of opening a folder, selecting all then collectively hiding all extensions.
Tried this on individual folders, nested folders and even my home directory. Nothing worked. All files still showing extensions. Restart and try again - same. Other features might work, but hiding extensions doesn't appear to. Running 10.5.7 on unibody with 4Gb RAM, all system software up to date.