For teleportation skills, that flag only affects whether vision gets checked for the source object to teleport. For the target, it's indeed not used and it must always be in sight.
Also note that this flag does not completely ignore vision checks (for teleportation nor for any other skills). It does ignore static vision blocking (not sure what this is), characters blocking vision, items blocking vision, and doors blocking vision. It does not ignore surfaces blocking vision though (like smoke clouds), unless it's a melee skill (which is not the case for teleportation).