OK - first: it doesn't fix VAR dependencies. The first two Vamifiers did, but since I got wise that VARs are shit and don't do anything good - it doesn't. So if you're asking about VARs - the code is commented out, might be brought back, but I really don't think VARs are worth it. They're basically a waste of your disk space. But talking about recursive dependencies - it didn't matter, as Vamifier just went through all the VARs, didn't follow dependencies manifest. But again - VARs are fundamentally broken concept, they create more problems than they solve.
What Vamifier does it puts single instance of EACH component: morphs, hair, clothes (including their textures, presets, etc - anything mentioned in their JSON files) into a "cleaned" dir and then resolves dependencies in scene, json or vap file using ONLY those cleaned components, using various tricks, so i.e. if there was a look with very common faceD.jpg (you have many of them, and there's a chance that each one is different), it will query the db for this exact file by its path, obtain its hash and check if a file with such hash was already "cleaned", if not - this one will be copied over and marked to cleaned and used when same hash will be ever reqired. It never extracts any VARs, if it requires a file from a VAR, it just extracts the single file into cleaned dir. So your VAR files are indeed intact. Vamifier doesn't touch anything in your "source" directory, only writes to "cleaned".