the by pass vavle only works if your intake us submerges under weater. which meants that your entire filter head must be in water, and you reving/driving while its under submerged. thats the only time where the by pass valve works.
if you spray water on the filter the by pass valve doesnt work.
i personaly think its a waste of money.
i woulndt worry too much about getting hydrolock, as long as you dont drive in flooded area. and plus stay away from deep water.
if it just rains then you should be ok.