Yes, that happens when explorer or cmd.exe starts utilmanMOD.exe directly or your custom utilman.exe passes command to explorer or cmd.
HOWEVER, that does not happen when parent process is not explorer or cmd. Basically, if your custom utilman.exe starts utilmanMOD.exe direcly, you will see utilmanMOD.exe running
I do not have any compilators to try, but I have tried with some trainer makers and autorun menu makers.
I can PM you proof - exe that will start utilmanmod.exe
Then only problem I have found - is that utilmanmod.exe comes with no text at all, but you can fix it.
In C:\windows\system32\en-US (or your language here) make copy of utilman.exe.mui and rename it to utilmanMOD.exe.mui