An old post but have been playing with the new to me GFX100S.
To answer a couple of questions, In the 35mm mode, either selected manually or on auto, the sensor acts as though it is a 60Mp 35mm full frame sensor. In theory. it seems like a good idea if you wish to use 35mm FF lenses via an adapter. However in practice, the camera is acting like a 60Mp 35mm camera and only records that area. It doesn't act like a magic format converter. So in reality you may as well switch if off and crop the images yourself.
It seems as though the camera only records what is on that part of the sensor both in the jpg's and raw files. So if the outer areas were not actually recorded, there is no way to recover something which was effectively never there in the raw file. Have now set it to "off" on my camera and will crop any photos with a hard vignette