Yes, the bypass pin is used to disconnect the tiller from the nosewheel. There was a problem with the early family of 320's that the nosewheel would jerk on its own with no input from the pilot, and that would be dangerous if the tow bar was still attached to the nosewheel (and not the tug also). It would snap the bar around and catch rampers legs (apparently happened a couple of times). Also it allows greater swing of the nosewheel, without it locking hydraulically. You can still push back within an arc of movement and the airplane will act normally anyway. Airbus has since fixed the problem, and I believe it was changed in our FOM, but I can't verify that cause I'm currently furloughed with no manuals.