That option is only for fixed addresses, not catchall addresses.
I.e. if your main email address is ojford@ojford.com but you're also preconfigured e.g. foobar@ojford.com you could set that option to have Gmail use either ojford@ojford.com or foobar@ojford.com as your return address, depending on the originating email's TO address. However, if you _also_ have a catchall address and somebody sends to newservice@ojford.com, even with the setting set your return address would be ojford@ojford.com.
Hm.. ok, I thought it worked but perhaps not - it has been a long time. I use my own client now, so obviously it behaves exactly as I want :) (which is as you describe).
I.e. if your main email address is ojford@ojford.com but you're also preconfigured e.g. foobar@ojford.com you could set that option to have Gmail use either ojford@ojford.com or foobar@ojford.com as your return address, depending on the originating email's TO address. However, if you _also_ have a catchall address and somebody sends to newservice@ojford.com, even with the setting set your return address would be ojford@ojford.com.