Hi,
1 - "Remove when deleted" works in the opposite direction, by removing from AquaMail those messages that have been downloaded before, and then discovered to be missing on the server.
2 - After you've chosen "Hide when deleted", the delete button (in message list, message view) will change into an "X with an eye" icon (my lame attempt at presenting "hide from view").
This button will hide messages without deleting from the server.
On the other hand, those messages that you'd already moved into [ deleted ] before then, will continue on their path as before - will be deleted from the server if you purge the folder. You might want to select messages in [ deleted ] and use the restore icon to move them back (up-pointing arrow).
Putting it differently: there are three ways to "delete" messages in the app. Account options and folders let you choose the default from that point on, but it's not retroactive.