Overrides do work, but unless you thoroughly understand them, try to avoid them. In most cases, Chapter Playlists or alternate navigation will do what you are attempting.
That said, for example, if a button is linked to Timeline 1 (that has an end action of going on to Timeline 2), and the button has no override set, Timeline 1 executes its end action and goes to Timeline 2. If the button has an override of "last menu," then Timeline 1 does not execute its own end action, but the override action from the button that called it - and returns to the last menu.
Timeline overrides do the same thing: if Timeline 2 has an end action of Timeline 3, and Timeline 1 (with an end action of Timeline 2 and no override set) links to Timeline 2, then Timeline 2 will execute its end action and continue on to Timeline 3. If Timeline 1 has an override set for "last menu," then when it starts Timeline 2, Timeline 2 will end by going back to the last menu.
I had presumed that overrides work as in your button example.
When I read your timeline example, I thought (brashly) that you had made a mistake.
But I tried it and it works exactly like you say!
Would it be true to say that timeline overrides are implemented on the timeline following, whilst button overrides happen on the current (linked to) timeline?
It would be hard to disagree with that, but, if yoiu think about it, the overriding action is on the "next" object either way. Part of the oddity, is the purpose of a button is to link, and it has no "end action" because its end action is the link. A timeline has its own end action, which it cannot override (the override is by the object that calls it), so its override, just like a button, is on the next object.
Thanks for reporting your test!