FWIW I think the multi algo works like this.
You set your miner software up with either multiple pools or multiple calls to the miner software in a batch file where each call runs a different algo. All the pools/calls use the SAME multi algo port and id details.
The Multi-algo port detects which algo you are using and routes you to the correct pool. IF the algo is not the most profitable of the set then the Multia-algo port closes the connection, this then makes the miner move onto the next pool (needs failover-only set) or causes the miner command line to exit and run the next one in the batch file.
So you configure the miner software to loop round trying each algo in turn against the multialgo port, the port will reject/close the connection if that is not the most profitable algo of the set. your miner MUST support all of the possible algo's which is why there are different ports for different algo sets.
This is a good explanation, much better than on the FAQ page. I like MPH but the frontend is a mess in useability terms and it could definitely do with better explanations. It would save a lot of newbie questions and confusion here. Not being able to easily see at a glance what you are mining at any given moment desperately needs to be fixed. I understand however that big improvements are pending.