Hi Ashley,
Yes, that is how it's supposed to work. When in Highest or Lowest mode, the selection happens purely based on which surface is higher or lower, and the mix controller has no effect. If you want to use a mask to control the mix, but combine it with "Highest" mode, you might be able to do this by using another merge shader to do a simple "All" mix first, then using that as one of the inputs to the "Highest" merge shader.
Matt