Yes, you got it right, except for the sentence "This would then presumably bypass the mains power input to transformer cicuit." which may be correct but I failed to understand (my fault perhaps).
This way of connecting the timer is terrific, and with my highest surprise it has been discontinued in later models, and I still wonder why.
The key point is that, by connecting the timer in this way, the timer doesn't turn on and off the whole power supply, lamp, etc. but it drives only a relay control WHICH IN TURN powers on and off the whole power supply, lamp, etc.
This means that, with an itty-bitty 10W max. load timer, you can drive a >250W monster as the Laborator, as the timer is connected only to a skinny relay which absorbs almost no power from it.
Wonderful, isn't it? Enjoy.