Mike,
You're right, I misspoke a bit when I said it was a weakness..

One of the algorithm's applications was to remove occlusion (which suggests it will handle limited occlusion okay), but I doubt it will be able to handle much more than a simple head bobbing into view.

As for backgrounds, as long as the background is not moving relative to the subject, I think all will be good. However, if the subject was running around with a busy background, the motion induced by the background may throw off the classification.