Yep. It does default to high accuracy. I just switch mine on whatever android device I use to battery saver.
I leave Bluetooth on in all my devices. With Bluetooth 4.1 we shouldn't be getting big drains whilst using or not using it.
Biggest impact on battery life on ANY android handset regardless of Ui has always been 'Google location history' buried in Google App settings. It is constantly poling your location and even with battery saver gps mode it adds significantly to the depreciation of your battery life.
Whilst you may not get 'automatic' traffic updates or such in Google Now cards with it turned off, the benefits of it off far outweigh it being on in my experience.
Does it affect finding your device with android device manager?