ARP is a protocol above OSI layer-2, and it relies on what is in the ARP packet to make its decisions. RFC 826, An Ethernet Address Resolution Protocol explains what ARP does:
When an address resolution packet is received, the receiving Ethernet
module gives the packet to the Address Resolution module which goes
through an algorithm similar to the following. Negative conditionals
indicate an end of processing and a discarding of the packet.
?Do I have the hardware type in ar$hrd?
Yes: (almost definitely)
[optionally check the hardware length ar$hln]
?Do I speak the protocol in ar$pro?
[optionally check the protocol length ar$pln]
Merge_flag := false
If the pair <protocol type, sender protocol address> is
already in my translation table, update the sender
hardware address field of the entry with the new
information in the packet and set Merge_flag to true.
?Am I the target protocol address?
If Merge_flag is false, add the triplet <protocol type,
sender protocol address, sender hardware address> to
the translation table.
?Is the opcode ares_op$REQUEST? (NOW look at the opcode!!)
Swap hardware and protocol fields, putting the local
hardware and protocol addresses in the sender fields.
Set the ar$op field to ares_op$REPLY
Send the packet to the (new) target hardware address on
the same hardware on which the request was received.
Notice that the triplet is merged into the table before the opcode
is looked at. This is on the assumption that communcation is
bidirectional; if A has some reason to talk to B, then B will probably
have some reason to talk to A. Notice also that if an entry already
exists for the pair, then the
new hardware address supersedes the old one. Related Issues gives
some motivation for this.
Generalization: The ar$hrd and ar$hln fields allow this protocol and
packet format to be used for non-10Mbit Ethernets. For the 10Mbit
Ethernet takes on the value <1, 6>. For other
hardware networks, the ar$pro field may no longer correspond to the
Ethernet type field, but it should be associated with the protocol
whose address resolution is being sought.
Obviously, ARP will reply to the hardware address in the ARP packet, but that doesn't mean there is or is not a problem (see below).
Whether or not the ARP packet actually contains the original MAC address is unknown because the masquerading may actually modify the ARP packet to contain the modified MAC address. MAC address translation does not have a standard the way NAT and NAPT do, and NAT and NAPT actually fix up the transport protocol (TCP, UDP, and ICMP) for the new IP address assigned to a packet. What is to say that MAC address translation does not do that for ARP? That would be an obvious part to include in MAC address translation. That is where the actual switch model and configuration come into question. Without that, we have no basis for saying what MAC address translation does or does not do for ARP because it is not a standard protocol.
There is also the question of what the switch does for its MAC address table. Does it actually put the source host MAC address in it table with that interface, does it put the modified address in its MAC address table with that interface, or does it do both? Since there is no standard for MAC address translation the way there is for NAT and NAPT, again, we cannot know unless you explain the switch model and configuration.