This doesn't work. I have an article with a mix of h2 and h3 headings. As a test, I scroll to the bottom of the page and insert a link to an h3 at the top of the page. When I publish the article, I see the link at the bottom of the page and click it. What happens? Absolutely nothing.
If you didn't intend users to be able to select h3 heading, why on earth do you surface them in the drop-down.
YET ANOTHER POORLY THOUGHT OUT FEATURE.