What's a proper way to interpret HLG3/BT.2020 in a Rec. 709 project?

Hi guys! Did a search but couldn't find quick results. As I get it, the proper way is to apply an "HDR Tools" effect and select "HLG to Rec. 709". Or use the Color Space Override option in Info and select "Rec. 2020". The thing is that the second option produces more pleasing skintones (although a bit lighter image) and better looking faces right away and it's not just about lightness. Less reds in skin, different "curve", maybe. But the first option "tells" Final Cut" it's an HLG footage, and, as I guess, second option does not. Do I lose something precious regarding dynamic range with the second option or not?

Thanks!

Roman