I think it is a very nice addition overall, but it should not be tied to file extension or the Recycle Bin, and i assume it is bugged exactly because of this. It just need to be done it 4 steps without toying with filters as it's just adds unneeded complexity:
*"Keep original file when encoded result is larger" = "KOFwERiL":
1) If "KOFwERiL" is enabled in the options, then compare file size BEFORE triggering "Delete Original"
2) If it's smaller vs original then it should trigger "Delete Original".
3) If it's bigger vs original then "Delete Original" should not be activated at all and "KOFwERiL" should delete newly generated file into the void and leave original file alone.
4) If "KOFwERiL" is not enabled in the options at all, then "Delete Original" should work as before.
This way it will not conflict with the "Delete Original" option.