Does this work if PrestaShop merchandise returns are switched off?

Yes. The module keeps its own return records and never reads or writes PrestaShop's merchandise return tables, so it works whether that native feature is on or off.

If you leave native returns enabled, nothing conflicts: the two run side by side and the module does not interfere with the native flow. Most shops switch native returns off, because the module's customer-facing panel replaces the bare native form and adds the deadline the native form has no concept of.