I have noticed that when the holigraphy is engaged and the balance conrol is shifted from left to right there is indeed still out put from the speaker that would normally go silent.
Sonic Holography modifies the transfer function of the preamplifier by taking the signal from the left channel, equalizing and delaying it, and then playing it through the right channel as well as taking the signal from the right channel, equalizing and delaying it, and then playing it through the left channel.
The overall goal of the process is to create a more pure stereo signal at the listeners ear by generating negative interference (cancellation) of the right channel at the left ear of the listener as well as canceling the left channel at the right ear of the listener.
As the signal from the left channel is intermodulated with the right channel and the signal from the right channel is intermodulated with the left channel, turning the balance pot to one side or the other should produce a somewhat monophonic signal from both speakers that takes on the signal from which ever direction you turned the balance pot.
Without schematics, this is about all I've got.
I'm sure Tom, Anders, and some of the other gurus on here can give a much better explanation.