Cannot apply Weight Edit Modifier

I’m noob and cannot figure out how to use Vertex Weight Edit modifier in blender 2.65.8

According to manual i have to greate an empty group, a texture, and then set up the modifier so it assigns vertexen to the group with weight proportional to texture intensity.

Upper obect is grid 36x18, unwrapped with “Texture”.
Lower object is copy of the grid with modifier added, in weight paint view.
Th “Group” is emty group created in mesh options.
I see no weights here, neither they appear when i press “apply” on modifier.

What am i doing wrong?

Looks like it is a bug.
The VertexWeightMix modifier works well.
Workaround is to use instead of WeightEdit mod.