Just a simple little question:

If I know both/all characters in a new word, but don't know the word itself, does changing the grade on the right side of the page after completion reflect this fact? For example, when I see 字母, I could mark 字 and 母 as 3's or 4's, but still mark 字母 as a 1 and get it to come up again soon without affecting the SRS for 字 and 母. I think it works like this, but I'm just confirming.

Yes.