My apologies - I don't have my copy of HiF yet, so this may be of even more limited use than my normal drek.
F6.411 states that "A unit (whether entrenched/Emplaced or not) on a hillock has a LOS past all walls/hedges whose topmost height along that LOS is < the viewing unit's elevation. Such a viewing unit also has a LOS past the first wall/hedge whose topmost height along that LOS equals the viewing unit's elevation—and can also see along that same LOS past a second such wall/hedge but only to Locations that are behind but adjacent to this second wall/hedge, and beyond such Locations to ≥ the viewing unit's elevation."
So as far as I can tell (and this seems to jive with the FB6.123 EX), the wall is a 1/2 level LOS obstacle rising out of the hex base level (0), the top of which is equal to a unit on the EmRR. If the wall in this example were a 1/2 level obstacle rising from level 1/2, that would make LOS even more of a pain than it already is, although then the unit (from the EX) in FB F37 could certainly see the unit in FB C39, as the hedge on the F37/E38 hexside would not factor in to LOS, and the hedge between D38 and E38 would be ignored as being at a lower level (I think).
But I would (hesitantly) agree that a unit which is (automatically) at level 1/2 on the EmRR cannot get WA or HD status along the Y7/X7 hexside, as the units on the EmRR are not at the same base level as the wall.
It raises an interesting question, though - what if some crazy map designer tries to put a wall on a hillock overlay? As if the hillock rules are not already weird enough. Although my bet would be that a half-level obstacle on a half-level obstacle (sorta) would just block LOS in the exact same manner as a normal wall - no effect from a higher level, limits to the adjacent hex from same/lower level.
Sorry for the convoluted response, I tend to think out loud - even as I type!