This feature works very well. Tried it on multiple projects with very good results. More convenient to use than the Open MLT XML as Clip function.
According to the 18.07.02 new release blog:
This new menu item in the Timeline menu simply makes that more convenient and also works with an unsaved project
I’ve tried it with an unsaved project. The clip is exported but when I try to view it all I get is a black screen.