Jim:
Yes, a HT bypass setting simply allows one to select--from the front panel--which preamp one wishes to utilize, be it the integrated amp's own preamp section or an outboard HT preamp-processor. An audiophile is thus able to maintain the best possible sonics for two-channel listening plus have a convenient method to switch in his/her multichannel gear for music or movies.
This feature has become very common on high-end preamps in recent years (e.g., Conrad-Johnson, Audio Research, BAT, Pass Labs). A HT bypass also has been included in new integrated amplifiers from other companies (for instance, BAT, Bryston, Arcam, and Bel Canto).
I'm obviously disappointed that McIntosh didn't take advantage of a new model introduction to include it, too. A lot of folks on audio hobbyist forums ask for a HT pass-through feature when they're shopping for two-channel preamps and integrated amplifiers. It would have been great to point them to a McIntosh integrated amp that had it.
Maybe on the next new model.