I think I have finally come to understand the operation of the red and blue buttons. The description that follows is how I guess the buttons work based upon my basic understanding of the HVAC system gained from M-B literature as well as the forums on this website.
Air that enters the heater box behind the dash passes through the A/C evaporator. I'll refer to the air which emerges as "cooled" air, though if the system is running with the compressor off in economy mode it may in fact be at ambient temperature. Much or even all of this cooled air will pass through the heater core, and what emerges is referred to as "blended" air. This air has its temperature automatically controlled by modulating the flow of coolant through the heater.
The air which the HVAC system delivers to the side vents, floor, and windshield is always blended air. But the center air vents can receive both cooled and blended air. In automatic operation, if the system is cooling the interior, the center vents will deliver cooled air; and if the system is heating, these vents will be closed and flow no air at all. The purpose of the colored buttons is to override this operation and force the delivery of cooled (blue button) or heated (red button) air to the center vents.
So, the utility of the red button is apparent. The only way to get heated, temperature-controlled air through the center vents is by pressing this button. If the button is engaged while the system is cooling the interior, the air from the center vents will be a combination of blended and cooled air. Provided there is no latent heat in the heater, I suppose this is of no consequence.
What use is the blue button? The only instance in which it would override is if the system were heating the interior. And in that case, causing cooled, unheated air to come through the center vents conflicts with the goal of heating. So I don't see any practical use for the blue button.
Regarding back-lighting of the buttons -- yes, both should be lit. I imagine there is a bulb that is servicable within the center vent control unit, but I don't know for sure. At any rate, the control unit is easily removed. Email me if you would like instructions.