Currently it states :
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The internal mechanism is handled entirely within PHP and doesn't require mod_rewrite in Apache. However, it won't work on IIS, and if you do enable it, you must also ensure that your template contains a {metadata} tag. To enable it, set this option to true:
$config['internal_pretty_urls'] = true;
If you want to use mod_rewrite to handle URLs, you need to enable this:
$config['assume_mod_rewrite'] = true;
The way it is written and the way a newbie would be following the instructions would imply that it is OK to have the internal mechanism enabled and also have mod_rewrite enabled. At least that's how I interpret it.
Am I wrong?