Haven't tested actual hits yet, but I'd assume it's operating within the confines of everything else in the war room.

....unless the declare war mechanic only is usable if a country has hit you at least once in the set. In which case, that needs to be changed to retaliate against spy attacks.

As far as farming someone and then joining GDI to avoid retal goes, I'd assume the 72 hour mechanic would still be in place, but I'm not sure if the declare war mechanic is available at all.

Needs a bit further testing, but as it stands it's either incomplete or not functioning properly.