Exciting News! Foreground tiles are working. With a nudge from Headgrinder and advice from Grayface, I revisited this improvement. It was surprisingly easy to implement, and it will be even easier to use. The way it works is layer 2 is drawn between layers 6 and 7 when you add the instruction:
[x1000y1000]
Overlay=True
Expect to have it in the next release. Which I'll probably do after more testing --it was too easy, there must be a disaster hiding somewhere.
Originally I wanted to activate overlays with an object, but when I started working on it I realized that would have caused the same flash you get from objects and custom objects as well as a bit of slow down since layer 2 would've been drawn twice. Using an ini instruction is fast and free of flashes.
Edit: There's an interesting issue that comes with moving objects to another MMF2 layer, they don't interact with anything on the other layers. Enemies can't kill Juni and they ignore the collision mask. I'm not sure what to do about it. It opens the door for level designers to make many mistakes while using the Overlay, but it also presents a lot of cool possibilities. For instance, you can put a Sign on layer 7 with Sign Areas on a lower layer. This allows you to put the Sign wherever it looks best without worrying if the player can hit it. Until I decide what to do, I adjusted the code so that layer 7 objects are only moved if the Overlay is active; meaning this wont mess up any old levels.