I suppose you could enable DSD bitstreaming, that *should* disable any DSP effects (e.g. Output Format) while playing actual DSD files.
DSD encoding itself is independent of the bitstream setting, at least for PCM to DSD conversion. I have not tried your suggestion, but will as soon as I can turn off the Christmas music for a few minutes.
EDIT: Doing Output Format and turning on bitstreaming seems to play native DSD fine, while converting PCM. That's a good solution.
It seems to me that the best solution would be to update the Output Formatting - Sample Rate box to include the option to convert PCM not just to different PCM sample rates, but also to different DSD rates. And to extend the top end to higher samples rates, like 2.8, 5.6,11.2 MHz and have either No Change or a PCM rate to convert to. For one thing, that would eliminate the need to know that DSD converts to PCM at 1/8th of the original rate, something few new users know. It would be nice to have one user interface to cover all the options. The whole process is pretty convoluted as it is.