Currently, the Reconstruct from Seeds (as well as build active and build extent) will not work if you have overlapping seeds. You can click the button, but the tool does nothing. You have to delete your overlapping seeds, or, use the workaround we are using: move all but 1 of the overlapping seeds outside of the closed loop of parcel lines> reconstruct from seeds> move another overlapping seed into the area> reconstruct from seeds> move another overlapping seed into the area> reconstruct from seeds, etc. It's ok as a workaround, but certainly not efficient.
We would like the ability for the reconstruct from seeds tool to work even when there are overlapping seeds. One use case would be air space parcels - we typically have 4 or 5 air space parcels stacked on top of each other. If we need to shrink these air space parcels to seed, when it comes time to rebuild them, we would have to use our workaround of moving all but one of the seeds out of the closed loop of lines that bound the air space parcels> reconstruct> move another seed in> build, etc.