We do all our internals in GMT/UTC so if the sum of time zone and wall-clock time is correct, it should keep working.
Here is a tester script to compare with our server:
https://justgetflux.com/timesync.html
So yes, if "UTC time" in the OS is wrong, we will transition at the wrong time.
We only use tz changes as a cue to adjust location (like for traveling between timezones), but cancelling this dialog is just fine too.