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I see auto correction all the time. One of my big errors is typing too fast and writing hte instead of the. Thumb Keyboard corrects this all the time.
One thing I noticed is that once enough of a word is typed that Thumb Keyboard starts filling in the rest of the word, the right space bar turns into an underline. This will pick that word and fill in the rest (and correct spelling if figured out) while the left space bar will just keep what is typed without any corrections.
I do agree that it is not always as intuitive as I'd like it to be. If I misspell a word, it doesn't do a great job of word suggestions. This is one area where it could definitely be improved.