I checked precisely this feature and it work this way:
First, in the mode, TDW take all contacts in account, but treat them differently, depending if they were reported or not to you by radio.
Those who are reported by radio (radio message received), are taken in account for the feature to cancel time acceleration when contacts occur and the display of the contact provide more informations.
Contacts with no radio messages are also displayed, but with almost no informations. They are also ignored by the feature which cancel time acceleration (Notice that there is a possible cheat for these contacts, if you activate the "SH5 item note" option, you will see, on the note for such contacts, the distance AND THE EXACT SPEED).
The explanation that the contacts which are NOT "radio-reported", are radio transmissions intercepted by the sub, is acceptable for relatively close contacts, but what about contacts found in Mediteranian see, when your sub in in Noth see ?!?! Anyway, for such contacts, it would be quite logical that the feature who stop the accelerated time, would work too. Personnaly, for such a contact, if it is close enough, I will try to intercept it. TDW do-you read this ?
ACS
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