But I'm not, so I'm not allowed to. I wouldn't have a problem with it if I could - paying for ad-free YouTube with added features seems like a fair deal to me.

I wouldn't call "letting me turn off the screen or switch to another application while still consuming media" an "additional feature". Especially since they must go out of their way in the first place to detect when that is happening and to prevent me from doing so, as they do on their mobile website.

Curious to know if with youtube red, if i play in the background is it smart enough to switch to an audio only stream, or still full bandwidth?

Good question. As they normally serve their content as separate audio and video streams, it should be perfectly feasible to do that. I wouldn't bet on it, however.

I believe if you use the Youtube Music app to play things, you'll get audio only.

Amusingly, this does answer the parent question.