For the most part that is correct. Most crossovers are not like brick walls where it just completely splits the signal at the crossover point say 50Hz. They usually roll off the signal or decrease what is going to the main speakers while increasing the signal going to the subwoofer over a frequency range. This helps make for a smother transition between from the speakers to the subwoofer. I believe your speakers are rated down to 33Hz +/-3dB so using a 50Hz crossover will probably work with them though you might want to start with 60Hz.
But keep in mind what MidCow2 said about splitting the signal so each piece of equipment, speakers and subwoofer, are giving you the best sound because they are each doing what they are best at. Also if you like to play loud the higher the crossover the more load it takes off your receiver helping your front speakers play without clipping because they’re not getting enough power, but i wouldn't go any higher then 80Hz.
Yes you should set the subwoofer’s crossover either as high as it will go or set it to “bypass” if that option exists.
Something else you might want to consider is getting and SPL meter and calibration disk. These are extremely helpful in calibrating your system especially if you want to deviate from what your auto-calibration does. Here is one option.
http://www.svsound.com/products-parts-avia.cfm
Some people prefer the Rives disk
http://www.rivesaudio.com/software/TestCD.html
I would use the following settings:
CROSSOVER MODE = Bypassed
LOW-PASS FILTER = 120Hz this shouldn’t matter since it’s bypassed but just to be sure set it as high as it goes anyway.
PHASE = you have to figure out which sounds best to you. Here is where a calibration disk comes in handy but if you don’t have one play something with lots of bass in it and try both positions and see which sounds the best.
VOLUME LEVEL = try setting this about 1/4 volume and run the auto-calibration on your receiver and allow it to make your initial subwoofer volume setting. Then check your receiver’s settings and see how it set the subwoofer’s volume in the receiver. You should see something like -3dB or +6dB. This means to balance your subwoofer with your other speakers it either had to increase +6dB or decrease -3dB (your numbers will vary) the signal going to the subwoofer to balance it with your other speakers. If this is a large number either way then I would turn the volume knob on the subwoofer up or down some according how the receiver set it and then rerun the calibration. As long as the setting on the receiver is near 0 it will give the most room to tweak your subwoofer’s loudness from your receiver and not have to mess with the volume knob again. Again this is where an SPL meter and calibration disk come in handy.