[KevinH]

Marked Text is only supported when searching the current file.

Marked Text is not used when using the Filter Replacements Table or DryRunReplace. Those tools are meant for large numbers of instances, otherwise they are not needed.

Search direction still matters.

Yes if searching down the cursor must be above the marked text.
Yes if searching up the cursor must be below the marked text.

All search works this way in Sigil. Just try it in the normal Find and Replace window. As soon as you use the Search Menu to Mark Text you can see the target in the FindReplace set to "Marked Text". So your saved AH (All HTML files) target gets automatically replaced.

Again searching and replacing using marked text is limited to the Current File (and always has been).

Based on my testing with your example, searching in Marked Text works exactly as designed.