Yes, fallback to AHD (user_qual=3) is explicitly stated in docs:
===
Values 5-9 are useful only if "LibRaw demosaic pack GPL2" compiled in (see README.demosaic-packs in your distribution for details). Value 10 is useful only if LibRaw compiled with "LibRaw demosaic pack GPL3". If some interpolation method is unsupported because LibRaw compiled without corresponding demosaic pack, AHD interpolation will be used without any notice.
=== http://www.libraw.org/docs/API-datastruct-eng.html#libraw_output_params_t
Yes, fallback to AHD (user_qual=3) is explicitly stated in docs:
===
Values 5-9 are useful only if "LibRaw demosaic pack GPL2" compiled in (see README.demosaic-packs in your distribution for details). Value 10 is useful only if LibRaw compiled with "LibRaw demosaic pack GPL3". If some interpolation method is unsupported because LibRaw compiled without corresponding demosaic pack, AHD interpolation will be used without any notice.
===
http://www.libraw.org/docs/API-datastruct-eng.html#libraw_output_params_t