I don't typically use it to replace a cover image (I delete the existing cover image first), but I have witnessed some squirrelly behavior when used with existing covers in the past. I just never tracked down exactly what was happening.
I tend to use the InsertImageSVG plugin and just set the semantics manually for the cover image. But there's no reason why the built-in feature should not work correctly. I'll take a look at it when I get some time.
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