Do you think Distrust depth will be working on the same way as trust depth?
It does. If I distrust a user, but someone I trust trusts the same user, the higher level exclusion overrules the lower level inclusion, and their feedback will appear untrusted to me.
Edit: I am confused, Fuzzstone is DT1 but still his feedback are untrusted? It is due to my custom trust list?
The Default Trust list is essentially meaningless to you if you have your own custom trust list. Even adding a single person to your custom trust list will remove Default Trust for you, and so their feedback becomes untrusted unless you manually add them to your own list. See below from theymos:
If your trust list is totally empty, you trust "DefaultTrust", which includes some trustworthy people that I'll select. But if you add anyone to your trust list, even if they don't trust anyone, DefaultTrust will no longer be considered part of your trust list.