That nailed it on the head. An easy way when you pop in a CD to set that baby to remove as much processing as possible and just have good 'ole 2-channel full range (i.e. - bypass). To me, bypass should do nothing to the signal whatsoever, including not introducing a sub signal.
Or, the discrete code would've worked for me too. Or if the 7.1 direct didn't apply a crossover (or a setting to make it so) with the assumption that the 7.1 player had its own bass management, that could've worked too (could've just hooked CDP to 7.1 inputs).
They moved one step closer from the original firmware in the sense that bypass now sends a full range signal to the mains (even if set to small), but still left the sub on. This was really the only firmware update I cared about. Guess I'll just stick to leaving my mains on large, same as before the update.
Oh well, different strokes for different folks.