No.
It creates COPIES of your model folders. A benign feature that will not be used unless a shiplist has a starship that points to that model folder.
The SG shiplist itself points to these new folders.
If you are a model savy person and like a truely diverse fleet, then this gives you the ability to add in different mods. If not, you wont notice the difference, cept maybe a few extra megs taken up by the duplicate model folders...
EDIT:
Maybe I didnt understand your question, so Ill answer in a different manner.
Once you click on the dos installer, it sets you up for SG3. Logon and play.
Later, lets say you want to do a few GSA games. Easy, just clock the dos unistaller and it takes you back to the way your setup was before you installed the SG3 mod.
Afterwards, you want to hop back on SG3, just click the dos auto installer and it sets you up for SG3 again... Very simple.
I hope that clears it up