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The game does not store the "initial" ratings of players in the game files, so yes, using that button will essentially combine their current ratings with the "calculated" ratings based on their stats.
So yeah, unfortunately the function is not necessarily balanced or intended to be run regularly, although if you did run it more often, eventually players would converge to their current season stats ratings (ie. it's not like we say "oh he's having a good season, let's increase his changeup by 5%", it's more "his changeup was a 300, and when I calculate on his season totals it should be a 400, and we're 50% through the season, so make him a 350")
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