I have observed that data present in seed file of dgn file is not considered while writing the dgn file. Instead FME is extracting the file settings like units and writing the destination file.
It is better to retain the data (i.e. lines, tags, so on) as it is. It will be like updating the dgn file with the data just like UPDATE CELLS option to Excel
Storing the coordinate system from the seed file in the new DGN file created would be a nice enhancement.
I imagine the reason for the low number of votes is that most people would expect this as core functionality...?