The official server docs that talk about these level variable settings (and about the rcon protocol in general) are located here:
http://static.cdn.ea.com/dice/u/f/bfbc2 ... tor_v2.zipRedbeerd wrote:
When a server is "Modified" that means it shows differently in the Game Browser, Correct?
Yes, that's correct. It has a different icon, and players can filter by this.
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If so, would it only show Modified while Squad Deathmatch was running but normal while the other map modes were running?
That is the behavior that I would expect, but I don't know if it does it right. You'd have to test this

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Also, Someone posted that it only works on un-ranked servers. Do you know if this is still true?
As far as I know, it has always worked on ranked servers, and should still work in ranked mode. I tested these settings when they were first added to the game, and they definitely worked at that time.