This extension does what it claims: it generates queries in a very intelligent way, making it impossible for search engines to build consistent profiles about you and then abuse that data for their own purposes. The RSS feature allows you to enter as many RSS feeds as you like, thus building a huge database of search terms that the engines cannot predict nor easily recognize as artificial. I myself have some 20 different RSS feeds entered into it, from which Trackmenot can draw useful terms that have nothing to do with my own person. My private information is thus hidden inside a cloud of nonsense that Google is welcome to have.
Deleting cookies does not protect your privacy from search engines, because they can identify you by other means, such as IP address. Besides, the deleted cookie is simply recreated every time you use the engine, and for the entire session you will then be monitored.
It is also untrue that search engines will block you. If you use this extension properly (with your own RSS feeds, and by not settting the query frequency at its highest level) you will never, ever be blocked from using the search. I've been using it for two years now and I haven't been blocked even once.