I think the legal language is referring to holes intentionally cut into the side of the muffler (which may also include rust holes). However, some judge probably would, and has, expanded that definition to include remote-operated variable exhaust cutouts.

From what I've heard, bolt on plate-type cutouts like Franken-Truck mentioned are OK; you actually have to get out and remove 3 wing nuts per pipe, and then you have your open headers. But the VA state troppers aren't going to like anything you can do from your cab, especially if it's so obvious like an electric cutout you can use to "tune your sound". I have heard of people getting away with cable-operated cutouts, but I guess it really depends on your inspector.