Looking around in https://github.com/mastodon/mastodon/issues a little bit:
It seems that there has been a bug that blocked domain appeared from account feed, but which was fixed three month ago. https://github.com/mastodon/mastodon/pull/26823
I also found https://github.com/mastodon/mastodon/issues/28397 that user domain blocks do not prevent viewing updated profile information, which is not fixed yet.
I didn't look deep, but didn't notice any known issues suggesting fundamental flaws in blocking.