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I can report that the system appears to work – at least, it did for me.
Earlier this month I sent in a jumble of 70 stamps: some normal 1st and 2nd Class stamps, but also a mixture of very old stamps of odd denominations, including 7p, 18p, 38p. and even an old undenominated “euro” stamp.
The 1st and 2nd Class stamps were exchanged on a one-for-one basis. For the others, I got back a mixture of 20p, £1 and £1.85 stamps. The total value was about £6 more than those I sent in. And it was all well within the promised seven day turnround.
It was definitely worth the trouble of doing this, if only to get rid of all the odd stamps that I would probably never otherwise have used.