I may have jumped the gun. I was testing in low lighting, but tried it again it in a bright room. If I enable manual IR and then go to the live video and turn off led, they do indeed turn off, but the camera goes to colour. I tried comparing it to daytime mode and it's identical.
So it seems manual IR is just simply going to colour mode. I believe another user was mentioning this with screenshots. So it does seem like a bug.
Well, I'll try it tonight taping the IR lights.