Can I do the following?
Set CCV setting to Does NOT Match
Create new customer Payment profile that includes the CCV code. This should verify the card the first time.
Create future transactions and don't include CCV code. It is my understanding that no matter what setting are checked in the CCV setting that a transaction without a CCV code will still be processed.
Is this Correct?
Your understanding is correct. The Card Code response of "Does NOT Match" will only be returned if a card code is submitted. This setting does not specify Card Code as a required field for all transactions, that would be accomplished by setting Card Code as required in the payment form settings.