It looks like a yes. The action would still survive if the Supreme Lord wants it.
We don't know exact context where this verse occurs in the Moksha Dharma Parva. So, we can't say what is the meaning correctly.
I don't doubt the origin and existence of the verse in the Mahabharata. Mahabharata is an itihasa. Itihasa means a history. It's etymological meaning is "Said as it happened". So, Vyasa just repeated the sentences of Lord Krishna which were said to Arjuna. I don't doubt it because similar idea is said in other texts also.
In Bhagavad Gita, Lord Krishna says: From Bhagavad Gita US
na me viduḥ sura-gaṇāḥ
prabhavaḿ na maharṣayaḥ
aham ādir hi devānāḿ
maharṣīṇāḿ ca sarvaśaḥ |10.2|
Neither the hosts of demigods nor the great sages know My origin or opulences, for, in every respect, I am the source of the demigods and sages.
Alternate translation: (Swami Adidevanda)
10.2 Neither the host of the gods nor the great seers know My power. Indeed, I am the only source of the gods and of the great seers.
So, this verse is giving a hint that even devatas and rishis do not know the Lord completely and he is the source of all the devatas and all the beings. The verse cited in Baladeva Vidyabhushana commentary of Vishnu Sahasranama also gives the same meaning that the devatas do not know their origin.
For this verse, many great acharyas wrote their commentaries. You may check them on gita supersite.
Similar instance was found in Srimad Bhagavatam. After the great war ends, many learned sages approach the battle field. They virshni kings, Pandavas and Lord Krishna (notice that this takes place in the context of Mahabharata and Kurukshetra itself).
- For some time the sages pondered the Supreme Lord’s behavior, which resembled that of a subordinate living being. They concluded that He was acting this way to instruct the people in general. Thus they smiled and spoke to Him, the spiritual master of the universe.
The great sages said:
- Your power of illusion has totally bewildered us, the most exalted knowers of the truth and leaders among the universal creators. Ah, how amazing is the behavior of the Supreme Lord! He covers Himself with His humanlike activities and pretends to be subject to superior control.
Lord Brahma who knew the past, present, future was also bewildered by the actions of Lord Krishna. He tried to show his power and check what is Lord Krishna's power.
- O Maharaja Pariksit, Brahma, who resides in the higher planetary system in the sky, had observed the activities of the most powerful Krishna in killing and delivering Aghasura, and he was astonished. Now that same Brahma wanted to show some of his own power and see the power of Krishna, who was engaged in His childhood pastimes, playing as if with ordinary cowherd boys. Therefore, in Krishna’s absence, Brahma took all the boys and calves to another place. Thus he became entangled, for in the very near future he would see how powerful Krishna was.
If we look at the beginning of the incarnation of Lord Krishna, Bhu devi (goddess Earth) pray to Lord Brahma and prays for relief from evil and sinful people. Lord Brahma reaches the abode of Vishnu and then he gets assurance that Lord Vishnu will take appearance on the Bhuloka for the relief of goddess Earth.
- Realizing the piteous condition of the earth, god
Brahmã accompanied by the three-eyed god iva and other
gods, came to the shore of the milky ocean, along with her.
After reaching there1 he with perfect concentration
of mind, praised in terms of the Purusha-sükta the Supreme
Person, the Lord of the world, the god of gods, the absolutely
blissful Enjoyer of sacrifices.
Listening to the voice uttered in the sky while he was
meditating (upon the Lord), god Brahma spoke out to the
celestials, “Oh immortals, hear from me the words of the
Supreme Person and comply immediately with them. Let there
be no delay.”
The affliction of Mother Earth was already understood by the Supreme Person before we appealed to him. You should now take birth in the Yadu Clan, in your part-
manifestation, while the Lord of gods will walk over the earth, reducing its burden through his potency called Time.
There are many such examples where the devatas or rishis who are very close to Lord Krishna, well learned and knowledgable in shastras were bewildered by the yoga maya of Lord Krishna. Above one about Brahma is one such example.
So, the maya still works on the deities irrespective of the end or beginning of the avatar.
would the delusion of Siva and others have continued after the Krishna Avatara ended?
Yes, the delusion would have continued. Because
The avatars are not temporary. According to some puranas and agamas, there are different abodes for different incarnations. They live in their respective abodes or planes. They have forms in abodes. They just descend to earth when there is need. What are references for Rama's abode in Vaikuntha region?
Otherwise, they merge take the original form. So, even if the avatar ends on the earth, the deeds done by them will still have effect since it is done by Lord only.
There are statements and promises by avatars to the devotees that who ever worship them will not face any difficulties or problems and he will take the responsibility of saving them. There are also statements which show the permanent validity of deeds of avatars. For Ramayana, there is one such famous statement. "Ramakatha stays till there are oceans, rivers and mountains on this Earth.."
As long as the mountains and even rivers flourish on the surface of the earth, so long the legend of Ramayana will flourish in this world [37]
And as long as Rama's legend authored by you flourishes...till then you will flourish in heavenly, in netherworlds, and even in my abode, namely Abode of Brahma... 38 Bala Kanda chapter 2
It means the story would be eternal. The name is eternal and the incarnation is also permanent. That is why people worship and even get fruits of worship.
The action/curse seizes to work if the Lord wants it to be lifted up. Curse of Godavari is an example.
Then all great sages said to the eternal Rama: The sages said:
Ganga, purifying the three worlds, has risen from your lotus-like feet. O lord of the world, you alone can free her from the curse.
