Just like the Intel chips with integrated video, the AMD APU won't completely shut off, but will gate it's power so it is basically just idling at a low power state. The CPU cores will continue on as normal. It will use less power and create less heat than just using the APU with it's own integrated GPU.
The two won't pair together, I'm not sure how they will play with things like PhysX since the proprietary stuff from either manufacturer usually disables as soon as it sniffs the other manufacturer even being in the same house.