But this is exactly how it works. On my 8, I have emergency bypass turned on for my wife. When the hardware switch is turned to the "silent" position, I still get a ring when she calls and a tone when she texts. Everyone else I hear nothing.

It seems likely that the side switch is anyway connected to software - on iPad its purpose is configurable and I think it was for a short period on iPhone. I always assumed the point of the switch was for quick and convenient access, not for certainty. Besides, the hardware button also fails embarrassingly when full of lint.