Panels "Disable Drupal blocks/regions" - doesn't work correctly

When using Panels, disabling blocks via "Disable Drupal blocks/regions" checkbox on a variant's "General" settings, doesn't hide blocks and they appear in the middle column on a page.

This is how the problem occurs.

Block hiding is performed by CTools. In ctools_block_list_alter() it checks ctools_set_no_blocks drupal static variable, and if its TRUE, it removes "bad" blocks from block list. This variable is initialized in ctools_context_handler_render_handler() after calling a renderer:

function ctools_context_handler_render_handler(...) {
  $function = page_manager_get_renderer($handler);
  ...
  $info = $function($handler, $contexts, $args);
  ...
  // Only directly output if $page was set to true.
  if (!empty($info['no_blocks'])) {
    ctools_set_no_blocks(FALSE);
  }

So if a renderer would call block_list(), "bad" blocks won't be removed (since ctools_set_no_blocks is not initialized). And that is exactly what happens in Fusion.

It calls block_list() from fusion_core_block_list() which is called for the first time from:

• fusion_core_preprocess_node() - to fill up node_regions with blocks,

if there are nodes on a page.
Another time fusion_core_block_list() is called by Fusion from:

• fusion_core_preprocess_page() - to get appearance info for $grid's sidebars.

but this time, "bad" blocks are removed from the block list.

There are two ways to fix this problem:

• In CTools by moving ctools_set_no_blocks initialization before calling a renderer,
• In Fusion by not calling block_list() at all. I don't know however how node regions would work then.

Giving this a "bug" status, since initializing block_list from node preprocess looks strange.