ObGenBlocker v0.1 - Obsidian Generator Blocker [1185] This will block obsidian generators from working on your server. No configuration needed; just add the jar to your plugins folder. Features: Blocks obsidian generators Download ObGenBlocker 0.1 Source Code Changelog: Version 0.1 Initial Release
Yes, obsidian generators still work if you don't install my plugin. Your test is flawed. Here are some screenshots from a 1185 server and 1.8.1 client.
I'm using 1191 and I put the redstone / lava exactly how you have it? Not sure why.. maybe I'm just too lucky
For compatibility with 1.1-R6 and newer, some changes were needed. I've posted a pull request. Unofficial updated version: http://wimbli.com/minecraft/ObGenBlocker-0.2.jar