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"what is the difference between stereo bypass mode and simply choosing 2 channel stereo?"
For most processors (including mine), the difference is in stereo bypass mode you are going straight to the volume control from the source with no extra processing....With 2 channel stereo, you have the ability to add bass/treble and other EQ functions so the signal is going through an extra conversion. More simply put, the bypass mode is more likly passive while the 2 channel stereo is active.
As for your subwoofer question, it depends. Some processors allow the sub to be used in bypass, some don't. It should tell you in the manual.
Charles
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