These wavelets are meant to encode a file that will be later decoded, so overall, they are a no-op. It’s just a trick to compress pictures by removing high frequencies. It’s a whole different topic than what I’m taking about (aka picture editing & pixel pushing).
Guided filters for edge detection will behave erratically outside of a linear space. It’s yet another case of things that could work fairly in gamma/display-referred space, until someone finds a case where it fails badly. Scene-linear is just way more robust and simpler. Just stick to physics, and everything should be fine. That’s all we know anyway.
I have been working on a similar feature in parallel since last Christmas, also with iterative guided filters, but with a different approach. My code only makes use of linear operators, and doesn’t need thresholds to avoid halos, nor ratios preservation since it’s basically an exposure compensation.