The docs specify that fail will "prevent other actions from performing."

However, setting action_result to fail on a basic action_on_block_use with a block specified in item_condition doesn't prevent blocks from being placed, as shown here:

This is probably implemented in apoli.

I believe action_on_block_use with an action_result of "fail" will only prevent other actions from using the block, not using the item. Since it does not touch anything related to block items and such, I believe this is working as intended