The setting in Project->set programs' arguments->host application is completely ignored (at least on linux).
It continues to simply execute the output binary, or call /usr/bin/cb_console_runner via xterm with the output binary if the "run host in terminal" option is selected, as if it were set as console executable in project settings, regardless of the project type and regardless of what's set as host application.
SVN 10854, linux 64bit.