I know that taking a quick look at a schematic can sometimes be misleading.
Look closer at the schematic and you will see that SW2 in the position shown (kill) does bypass the upper part of the schematic (which is the LFO). Instead, it connects a steady voltage to the optocoupler and “kills” the effect while passing the dry signal. But, the LED is still functioning as a rate indicator in the LFO section! Even better, it changes color to show that the effect is bypassed. Clever design!