Ok, after some testing, I've noticed the following behavior:
If I have an htaccess file at the root level, *and* in the subfolder where Wordpress is installed, when I enable Falcon Engine, it only updates the htaccess file in the subfolder - not the root htaccess file.
If I delete the htaccess file in the subfolder, and there is only one htaccess file at the root level, then enable Falcon Engine, Wordfence will then update that htaccess file at the root level.
(Incidentally, I put Cloudflare into Development Mode, and disabled the Cloudflare plugin, as well as purged the Cloudflare cache before doing all of this. I am not sure if this had anything benefit or not though.)
I am assuming the htaccess file needs to be at the root level, if I have my Wordpress index.php at the root level, and the rest of the Wordpress files in their own subfolder. However, I would suggest you make this more explicit in the Wordfence admin area as well as the documentation, and perhaps give an option to toggle which htaccess file it should be writing to depending on your Wordpress installation.
I am still unclear about if I need to have the Wordfence Cloudflare option selected if mod_cloudflare is already enabled on my server though.
