It does with mine, played most things that you can get for Pal plus some gamecube backups I have, all work fine. I'm not that bothered one way or the other it does all I need right now.
Just installed mine bought from dealextreme into a pal wii and it works fine, updated config with 1.2 disk and as far as I can tell is region free (well cooking mama works) cannot see any reason to pay more for an 'original'