will users see when posts are deleted?
No. I might add that later, but it's not a trivial change.
Self-moderated topics? Can you say what boards this applies too? This is going to be bad if it is on certain boards, cause some people can edit threads to benefit them, I really hope it is just the off-topic board.
The excluded sections are Meta (except for this topic), Scam Accusations, Important Announcements, and Auctions. Tagged scammers can't use this feature. You don't have to participate in self-moderated topics if you're worried about manipulation by the OP.