Thanks for your report.
So would an acceptable solution be that the "Keep temporary copies of remote files in deterministic paths" would not apply for custom commands? It might even be a good idea, as even a read-only custom command (like text search/grep-kind of command) might inadvertently overwrite a file you are just editing.

I have a custom command that uses WinMerge to view the differences in two remote files.
The command is:

"Local Command" is checked
"Use Remote Files" is unchecked.
"Apply to directories" is unchecked.
This works as expected, the selected files (!&) are downloaded and opened with WinMerge.

But when I check the storage preference "Keep temporary copies of remote files in deterministic paths", the !& pattern no longer expands to the selected files, but it seems to expand to all files that I have in my temp directory.

I like using the deterministic paths option for many reasons, mainly because when I use Sublime Text, I can see all of the files as they are organized on the server.

I am using version 5.19.5 on Windows 10.