My understanding is that it is recommended to disable the Last Channel override on Internal and Direct channels. But doesn't this mean that any new visitor from this point onward will never have Internal or Direct recorded as their Last Channel?
What this really means is, "if there is a Last Touch Channel value persisting, do NOT over write it." Also, Last Touch Channel values can expire. So if the a user waited for their persisting, Last Touch Channel to expire before retuning to the site, when they came back from Direct (internal - which should really only happen if they had the tab over for the whole time, but never refreshed it) there would be no Last Touch Channel persisting, and thus the last instance of Direct/Internal would be counted.