In practice it did, because it required an unprunable copy of the whole blockchain to do anything with it. So everyone used it with various services and eventually the services returned inconsistent results (due to differently mishandling reorgs).

There are lots of things that can be done which are merely decentralization theater, sometimes because the design obfuscates the hidden decentralization, in other times because they're  not practical without it.  I'd say that was true for firstbits in practice, its true for the scheme here too though I believe it could be improved to be SPV-ish; but that still leaves the other downsides.