Thanks for the replies. Generally, my experience was consistent with Oldsfan's description. There seems to be some disagreement as to the actual operation of the H.C.V., though, so I decided to *gasp* consult the 1966 Oldsmobile Service Manual.
Here's what I gathered:
Ignoring the Toronados, there were 5 heating/cooling options for Oldsmobiles in 1966:
1. No heater (manually operated cowl doors only)
2. Heater with no A.C.
3. Heater with vacuum controlled A.C. (88-98-Starfire only)
4. Heater with cable controlled A.C. (F-85-Cutlass only)
5. Automatic temperature control (Comfortron) (88-98-Starfire only)
Oldsmobile calls the part a "water valve", and it only comes with certain configurations. Obviously, if you bought Option #1, you have no heater, and no heater valve.
Interestingly, Option #2 also has no water valve. The valve is simply not mentioned in those sections of the manual, nor does it appear in the vacuum routing diagrams. Vacuum is routed from the vacuum tank to the console, but never again passes through to the engine side of the firewall. So on those cars, coolant must always circulate through the heater core, but air from the blower motor bypasses the heater core when the "temperature door" is at the "cool" setting.
Options #3 and #4 both have a water valve, and they work similar to each other, as far as the valve is concerned. The temperature selector controls both the aforementioned "temperature door" and the water valve. My car has option #3, and that explains why, even when the water valve was set to always be open (hot), I could still feel cold air when the temperature selector was set to "cool" -- the air from the blower motor was bypassing the heater. I suppose some air was seeping past the heater core, and that may have increased the temperature of the "cool" air by a few degrees, but it is good enough for me.
Option #5 also has a water valve, but in addition to the normal vacuum connection, it has an additional 2 vacuum lines at the other end of it. The Service Manual labels these other connections "THERMOSTATIC VACUUM VALVE (OPENS AT 120`)" I don't know what that means, and probably never will. Comfortron makes my brain hurt.
So even though the water control valve is only present in cars with A.C., from what I read, it really acts independently of the A.C. Also, the manual mentions that the valve is not present on cars with L-6 engines. Since you could buy a car with a 6-cylinder engine and air conditioning, this shows that the valve is not required for A.C. There is also a single mention that the water valve is not present on the 400 ci engine. This is only a single instance though -- the rest of the chapter treats all V-8s the same.
So, to answer my own previously posted questions,
1. What does the heater control valve do?
On cars that have it, it controls the flow of engine coolant through the heater core.
2. What controls it, if not the temperature selector?
The temperature selector DOES control the heater control valve, but it also bypasses air around the heater core, so the H.C.V. plays only a secondary part in determining air temperature
3. Am I causing any harm by keeping the valve open 24/7?
Nope. Many H/C options didn't even have the valve at all, so they were essentially "open" 24/7 too.
And to respond to 68conv455's question, your non-A.C. equiped Cutlass wouldn't have had a water valve anyway, so it is safe to not use it (assuming the 1966 Service Manual also holds true for 1968 models).