Lee,
No, the diagram is not wrong. There are no threads at the bottom of the pan, they are above the baffle. The baffle is at the bottom of the pan as shown in the drawing. The majority of the oil drains thru the hole in the top of the Fumoto drain plug, however, once the oil gets to the level of the top of the Fumoto Drain plug, there is no way of draining the rest of the oil unless 1. ) you remove the Fumoto drain plug completely like you would the stock drain plug or 2. ) you drill the holes just above the gasket to allow the oil to drain thru the baffle and out the holes you drilled in the Fumoto drain plug.
Next time you take your drain plug out, get a flashlight, wipe the oil off, and look up into the hole, you will see what I'm talking about.
I think CTD designed the pan this way to allow all of the oil to drain with the stock plug removed. This way the height of the threads do not effect the draining of the oil.