I'm not sure what problem this snippet is illustrating... The image provided by the OP shows that a dividing line is inserted between selected selected stanzas, which you can do by adding the override to a specific Lyrics context as you do above, for each instance needed. Are you referring to the interaction of the line with stanza numbers (which I know is flawed)?
No…
When I compile it with the original (single-Lyric) snippet, it works as expected.
With my modified (multiple-Lyric) snippet, no lines appear at all, anywhere:
Cheers,
Kieren.