I have been playing about a bit more, but cannot get the results exactly as you did, the main problem is with wrap text as this would be the most common usage for text more than a simple single line comment.
The only thing I did notice however was that if the spelling mistake is on the first line and text wrap is on and the text fills the cell, it does seem to work but not for any words in line two onwards.
I do agree, as you say, if there is a lot of white space above/below the text due to a neighbouring cell height etc then that stops it working altogether whether text wrap is on or not.
So in essence, cell width and height does play a part in the problem but even with sizes correct, with wrap text it only seems to work on words in the first line of text.