REDColor / REDGamma are the new defaults for a reason. They show the image in a very reasonable way that is compatible with a REC709. You should be using REDCine-X with M-X footage as REDAlert! and REDRushes have been deprecated and do not support the M-X sensor.
Just to clear one thing up. Used to be viewing options on a monitor was Rec709, Redspace, and RAW. I would use Rec then double check the RAW as the director or client would think it looked to flat. Now the one to monitor in is RedColor for a image that please the director or client and gives a good example of what information your capturing.
Yes, the REDColor setting works just like you describe. There's still RAW there for a quick check, or you can flick on the RAW false colour exposure meter (purple and red) that shows clipping in the raw no matter what the ISO.