Is Milo's noise cancellation used with Bluetooth headset?

The Microphone Preference toggle in Milo Link controls with microphone (audio input) you use when a headset is connected to the Milo. If you change the audio input to use the headset's mic, you no longer use Milo's own noise cancellation. Any noise cancellation support for the input (your speech) will be provided only by the external headset. In other words:
If the external headset supports audio-input noise cancellation and you choose to use the external mic in the Microphone Preference setting, you'll experience the headset's noise cancellation, not Milo's;
If the external headset does not have audio-input noise cancellation and you choose to use its mic, you will not have any noise cancellation available.
If you use headphones (no mic) or if you use a headset as headphones only - that is, for listening (audio output) only while using Milo's mics for talking, then Milo provides the noise cancellation support.
Milo provides the noise cancellation support only when you choose to use Milo's mics:
if you use headphones (no mic; audio output only)
if you connect a headset with mic, but don't change the Microphone Preference setting to use the external mic - in effect, you use the headset as if they were headphones, for listening only.