First this diagram is wrong. Put the T-valve inside engine not away from it.
Second if you are describing it right - the red line - then you radiator is not bypassed its actually your heater core that is bypassed.
Its a bullcrap done by mechanics in summer season - when heater is not being used - to avoid any hot air leaking into cold air of AC and effect its cooling.
Doing this be ready to get your heater core repaired the next time you put it back in circulation in winter season. Since it would be leaking.