Active line highlight overlays selection

When I change active light highlight color I can’t see selection, because selection z-index is less than line z-index. Is this behaviour intentional?

You need to use a (very) transparent color for any kind of background styling on text lines. The selection lies behind the text (it’d cover the text if it were layered above it), so an opaque background will indeed hide it. This is just the way things are, given what we can do with CSS.