In theory, it does. In practice, pretty nobody actually does this, because it's largely unenforced, and on the other hand, nobody wants to lose their internal passport and have to go through the headache of replacing it. Losing your international passport as a non-citizen would be even worse.

A cop on the street isn't going to check whether your passport was or wasn't revoked (and in fact simply can't). You would only notice that at the airport. And he did in fact claim that he noticed this in the airport, when trying to leave Russia.