The plugin was built this way after receiving feedback from many users of the drupal module, not everyone wanted it to work the way you describe, it did previously work like that in the drupal module and when I changed it nobody ever complained about it because it provides the best of both worlds as far as I'm concerned, infact your the only person who has complained about the way the contact list selection works, albeit not the only person who has said the inline comments are confusing :(.
My thinking was that some people want to do what you described but some people also want it so newly added lists automatically appear without having to go into the plugin interface and specifically enable each new list.
I would not recommend you change this Zack unless you can get a few more users to agree that it would be more useful without more options, I know for a fact you'll piss off some users straight away by doing this.
Perhaps we can make it so it's just more friendly to use like we have discussed before, maybe use some ajax to change descriptions depending on the list selection method (checkbox or drop down) and maybe even providing an option to say something like "Do you want to show all lists or only show the contact lists you choose?" then when they select one of those it will show the corresponding set of checkboxes for them to choose which lists to hide or show?
Please do not rush into anything on this without consulting more users :)