This is only modestly-informed speculation (at best;-), and not fact:
The use of a series resistor to control output seems a rather 'crude, brute force' method which has its pros and cons (like so many things), and its applicability certainly depends on the design of the light module. Options are limited however, and one does what one must. Having a lower output available can be essential, and I'm not condemning them; there's one in both of my MD2s. One downside / caveat is that while they are practically functional w/ some (mostly?) single-output LED modules (like my M61N & SHO), they likely are not with many multi-output modules, apparently including the M361. This is apparently not unique to the Malkoff Hi-Lo ring, but also applies to the Elzetta Hi-Lo tailcap as well. There's also the voltage drop across the resistor and resulting power loss, but back to functionality:
I'm not familiar w the M361, but this sounds similar to my observation with a new Sportac module I'm using in an Elzetta Bravo, which happens to have the Hi-Lo tailcap. I don't know the 'input voltage range spec' for the Malkoff, but it's 2.7V-6V for the Sportac; which, as an aside, draws ~3A at turn-on. It is a 2-output module, so I have no need for the Hi-Lo tailcap with it and do also like the levels of the Sportac (100/20%), but if I do loosen the tailcap for the Lo setting, the light shuts down after ~1 sec. Clearly the Lo setting reduces the voltage supply to the module to a level below its effective input operating range. I'd expect some variability with some modules depending on voltage / SOC of the cell(s).
My Malkoff rings have a 68 Ohm resistor, and I don't know what's in the Elzetta tailcap, although it works fine w/ the Malkoff modules above. I haven't tried sticking the Sportac module in an MD to see if would run with that setup, but I rather doubt it, as I think Malkoff ring Lo looks lower to me than Elzetta tailcap Lo does to me.
Anyway, it's a sort of fundamental thing that comes with such designs, it seems. I'm appreciating having the 2-level module.