I made several installations using 720K floppies using the micro8088 BIOS without any problem. Just to be sure that these images were fully supported I ran Scandisk and scanned all sectors. It works fine.
I tried to run Scandisk on a 1.44M floppy and got the error of Invalid Media Byte. Scandisk says it can fix it but if you try it breaks the FAT table. Not only that but you cannot reformat it.
I also tried to format unbroken 720K and 1.44M floppies but it is impossible as FORMAT thinks they are 360K floppies, overriding with /F does not work better.
This is not a major problem as you can read from them. Apparently writing on them does not work: some time ago I wrote files on a 1.44M image but did not test it. Today I did and trying to read what is on it gives Sector Not Found.
Conclusion: you can only read from 720K and 1.44M floppies. This is enough for normal use.