In theory, either can be made to work.
In practice, it's easier with the heater bypassed, as you don't have to reinstall the plug (so it's airtight and water can be forced out the hot lines), and then remove it again afterwards (so any water from the cold lines forced into the water heater is removed). It also avoids having a large air reservoir--the heater tank--from generally interfering with and slowing down the process.
Once the winterizing is done, it matters not one whit which way the valves are set.