The Mac has Hot-Plug support and it should be fully functional and without such issues at least on ATI chipsets. That mans at any point in time you can unplug one monitor and plug in another one and the display will be recognized and new settings will come up automatically. No need to press any buttons or run any software. The most difficult situation for such a feat is while the computer is fully awake.

During wake from sleep the DVI port is always scanned for changes and any new monitor detected should be brought up properly.

My guess is that in your case it's either the drivers (more correctly the NDRV aka runtime display driver or firmware) for the on-board graphics OR the switchbox is "dodgy." If the computer cannot read the display's EDID (descriptor information) over DDC (display data chanel - pretty standard and present on all computer displays for the last few years), then it's all going to fall apart and at best you'd be left with some generic mode.