What exactly do you mean by "transfer manually"? Did you drag and drop the songs to the phone in ITunes rather than syncing?
No.
If you want to reduce the bitrate on the phone, you can simply use the "Convert higher bitrate songs to ..." option in iTunes and sync normally. iTunes will then reduce the bitrate on the fly.
I have that option checked. I have been using this for years, even before iTunes Match came along.
I often sync via iTunes before enabling Match and it has never deleted any songs on the phone (since iOS 6.1).
Well, apparently, it works for *some* people, and not for others.
There are plenty of people that report that their entire music gets deleted the moment they turn on iTunes Match.
I have tried it at least three times, and it never retained all music. In one occasion, it retained about 2% of my music. WTF ?
Judging by the warning that you get when you try to turn on iTunes Match, deleting the entire previously synced library is by design, not a mistake. I don't understand why Apple sometimes is so *&%$%# dense about things.
-t