The docs for `blocksonly` say that "Transactions from the wallet or RPC are not affected" but the code says:

    if (gArgs.GetBoolArg("-blocksonly", DEFAULT_BLOCKSONLY) && gArgs.SoftSetBoolArg("-walletbroadcast", false)) {
        LogPrintf("%s: parameter interaction: -blocksonly=1 -> setting -walletbroadcast=0\n", __func__);
    }

Here's the relevant documentation:

    -blocksonly
       Whether to reject transactions from network peers. Transactions from the
       wallet or RPC are not affected. (default: 0)

    -walletbroadcast
       Make the wallet broadcast transactions (default: 1)

Doesn't that imply that `blocksonly` *does* affect transactions from the wallet?

{
    if (initialSync || !pBlockIndex)
        return;
    std::string strCmd = gArgs.GetArg("-blocknotify", "");
    if (!strCmd.empty()) {
        boost::replace_all(strCmd, "%s", pBlockIndex->GetBlockHash().GetHex());
        std::thread t(runCommand, strCmd);
        t.detach(); 
    }
}
#endif
static bool fHaveGenesis = false;
static Mutex g_genesis_wait_mutex;
static std::condition_variable g_genesis_wait_cv;
static void BlockNotifyGenesisWait(bool, const CBlockIndex *pBlockIndex)