I have a 2007 Chevy Tahoe and just received everything to finally get the install done. I am using the PAC OS-3 Bose adapter so that I don't lose OnStar, chimes, etc. Will the bypass method still work if I am using this component in the install?

yes

I have a 2006 sierra which is a similar setup to the 2007 tahoe above. My question is that since the onstar PAC adapter mutes the radio when the onstar is used - will i lose that functionality with the mod?

No. Just for the record your truck is a totally different can of worms than the op's.

thanks for your help cntrylvr79!