Dynamic Web Services reference URL in Visual Studio 2005

I am using dynamic URLBehavior for some web services and during Setup change web services URLs to appropriate value (based on MSDN article).

According to MSDN2: If you set the URL behavior of the Web reference to dynamic, the application obtains the URL at run time from the appSettings element of your application’s configuration file. 

However I’ve noticed that app.config file has entries for the same URL in both appSettings and <applicationSettings>.
After reading the generated code (Reference.vb/cs) it seems that appSetting entry is ignored, and the actual url from applicationSettings is used.

After some research I found a confirmation here.

I didn’t have a chance to test it yet. 

It seems like breaking change for my Setup/installer program.

Update: I’ve posted a helper class that allow me to Update Dynamic Web reference URLs Diring Installation in Visual Studio 2005