On the mods that evolved from my system of encumbrance, which by the way was itself an evolution of encumbrance checking at Silverstag,
there was no one byte "encumbrance penalty" check. Every place encumbrance was calculated or re-calculated would have to have coding added to skip the check and give a dummy value (that is, lie about the result) so that the next code interpreting dodge or movement speed works correctly. An on-off switch would be more complicated than you make it sound.
Sorry to have to explain it that way, but I was the one that added those layers to many mods in the first place.
That would have been the 2015-ish era of Warband modding.