Yeah i just figure that out.
I guess this is part user-error, part weird design.
It would make more sense to have a automatic differential override, whereby if there is a change that is different from the project settings, it becomes unchecked.
And then in addition to that, have a ‘Set as Global Project Settings’ button, which would then rewrite the Project Auto-Fade settings, and thus recheck the ‘Use Project Settings’ box.