It is true that even without Fences, my desktop icons are covered up by setting a screen-saver to the desktop level. Programs like Rainlendar, Objectdock, or even Windows Gadgets render above the desktop layer... therefore they aren't covered up by the screen-saver-as-wallpaper. If only there were an option in Fences to render above the desktop level... this would solve my (and many others) issue.
I can't fault Fences for not rendering above the desktop layer... but to have an option to render above desktop would prove invaluable for a large percentage of people who want to display a screensaver as their wallpaper. You can find plenty of youtube videos of people doing just that... they all have the same problem - they lose their desktop icons.
Here's a screen of my desktop with my fish tank screen-saver
http://img683.imageshack.us/img683/8282/desktopst.jpg
I have fences running, but you can see how no icons are visible.