Depends upon what you mean by "work fine with".
Webppliance is a web hosting system. It must be loaded on a stock Red Hat or BSD install, so SME is not a viable host platform.
Webppliance offers no security in terms of firewall, so you'd need to locate it behind a firewall. SME is probably not the best choice for that, either.
However, there is no reason Webppliance and SME could not reside on the same network and co-exist peacefully.
Webppliance excels at providing multiple physical or virtual domains, apache web services, email hosts and accounts, ftp hosting, etc. Everything you'd need to host web services, all managed from a very easy to use control panel. And if you want Webppliance on steroids, there is Plesk 6.
SME excels at providing virtual domains, web services, shared email, file sharing, printing, and other group oriented services that a small business would need to use for day to day operations. It is a wonderful solution in that space.
SME is not well suited as a web hosting system for more than a few domains, and is even less useful for email hosting (email accounts span all domains, making it cumbersome to configure "bob" as separate accounts.) I was hosting 100+ virtual domains on an SME system. Getting the virtual domains working wasn't all that difficult. Getting email to be useful was a pain in the rear end. And I had to do all the management myself. I am now more than happy to have paid the $800 (US) for Webppliance. It has saved me far more than $800 by eliminating all the unbillable work it took just to maintain the custom stuff it took to get SME email to be minimally acceptable. And as a bonus I'm able to provide far more services than I ever could have under SME, such as allowing customers to manage their own domains and email.
Having said all that, I still run SME internally for email, file sharing, printing, etc. It beats the heck out of any Microsoft (so-called) solution. Eventually I'll complete the migration to Linux workstations and be pretty much Microsoft free.
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