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That strategy really isn't ideal, because the wording of the option you're talking doesn't say that it will delete old backups; it says old backup sets, i.e. older Fulls and their child backups. But deleting an entire set can cause you to lose quite a few backups in one fell swoop, which is why it really isn't meant to be used as a substitute for having a "sustainable" retention policy, which allows individual backups to be deleted. That low disk space threshold purge is meant as a blunt instrument if you really want the new backup to succeed even if it means deleting a ton of older backups, rather than having the chance to potentially free up space before reattempting the new backup.
The other reason it isn't ideal is because the current set is never considered for deletion, since obviously if you delete the latest Full, then all of its child backups, including the one you're creating, would become useless. So if you have that option enabled and you're still seeing this error, then it's because there aren't any previous sets to delete, and the current set can't be deleted. But that also means you only have a single backup set at the destination, which is a risk in and of itself, since that means that if the Full ever gets corrupted or becomes even partially unreadable due to a problem on the disk that stores it, then ALL of your backups are useless. This is why you should always have more than one Full, preferably on separate physical devices, but at least on the same device.
And lastly, if you rely on only that option to free up space as needed, you could potentially have a situation where you're creating a Full backup, in which case all existing backup sets are eligible for deletion, and Reflect ends up having to delete all of them in order to allow the new backup to complete. In that case, there was a period during that new backup where you had no backups at all, since all existing backups were deleted and the new one hadn't finished yet.
Reflect does not have an option to say, "Delete whatever you need to in order to keep new backups running" like Time Machine or Windows File History. So you'll need to set your retention policy to something achievable if you want to run a backup strategy that only involves a single set. But I'd really recommend that you rethink your strategy so that you always have at least 2 Full backups on disk at all times.