It works on my Kobo Aura H2O. Firmware 3.11. Tested after rebooting from KSM 06, on power on after shutting down from KSM, and on power on after shutting down from nickel. I tried various passwords with a combination of mixed case letters and digits. The only quirk is that the "Enter" button sometimes appears in the top left hand corner of the screen after entering the password and pressing "Enter" but before showing the next screen. It is purely cosmetic and disappears without any user interaction. It has happened both after setting the password and after entering the password on boot.

Incidentally, I like having the USB filesystem support enabled on the password screen. It is comforting to have as a recovery option as I only use the password to keep out nosy people, not determined people. It would be nice to enable this as a setting in the released version. Of course, if it is kept as an option, it should be turned off before loading the menu.