The Master text spacing is used to set the vertical spacing of the remaining text objects.
gap (* (cdr(assoc 40 elist)) 0.6666) ; text height of master text
If there are mtext objects selected it will not alter the spacing within the mtext.
The alignment is also based on the Master Text Object. If it is Right justified then the remaining text
will be moved to the right side but the actual alignment style of the remaining text will not be changed.
Note that the Horizontal option in the first prompt is not functional at this time.
Having said all that I get the feeling I'm missing your point as to what is not functioning properly.