This work presents the derivation, implementation, and first applications of the generalized restricted-unrestricted method based on the density functional Kohn-Sham formalism. By using a spin-restricted Kohn-Sham representation for the reference state the well-known spin contamination problem is avoided, while the unrestricted representation of the perturbation response retains a proper description of spin polarization. The formulation is a generalization of our previous implementation of the restricted-unrestricted method [Z. Rinkevicius et al., J. Chem. Phys. 121, 7614 (2004)], as it accounts for the full unrestricted response instead of describing the spin polarization in terms of triplet operators only. The purpose of this paper is to investigate the role of the generalization employed and demonstrate its numerical performance. For this purpose we focus on isotropic hyperfine coupling constants of a set of organic radicals and transition metal compounds. For both classes of molecules we observe that the effect of neglecting singlet excitation operators in the response part of restricted-unrestricted formalism changes the calculated hyperfine coupling parameters by a few MHz. The obtained results confirm the validity of the approximation used in the simplified restricted-unrestricted approach, i.e. spin polarization can, in most cases, be adequately described by an account of only triplet operators in the response term.