Hey, guys, thanks for replying.
1-I am clicking the mute button with the mouse in Sonar as I have been advised that Automated Mute does not work right with a control surface. (In my case, it doesn't seem to work with the on-screen interface, either.)
2-Regarding clip automation and Melodyne, once a track is in Melodyne you can mute or even delete the audio clip and it won't matter because what you hear is the copy in Melodyne. Now that I write this, I could possibly try muting all audio clips and then try automating turning Melodyne off and on in the FX bin, but that is really more work than just automating faders and redoing them later for the final mix.
3-Automating Channel Tools is a really clever idea. That is a good thought for other situations as well.
4-About sharke's point: if I understand right, he is saying you need to be in Console View to get this to work right. Maybe that's the problem: since I have a hardware control surface, I am never in Console View. I was clicking the Automated Mute in Track View.
All this said, I really wish automated mute would work correctly. I feel I am doing something wrong.