@Morf: Yep, it does.
You'll have to convert your stuff with the 'Enable sharing' setting enabled if you want to get covers that way (via the content server).
The sideloading of the cover thumbnails is part of the 'Send to Device' process, so you're effectively bypassing it with your workflow
. (And it's the only way to get working thumbnails for stuff converted without the 'Enable sharing' setting).