Just got back from a Princess cruise (Panama Canal - Great time!). We too were a bit confused on the auto tipping. So we asked our waiter. Apparently, if you deduct from the auto tipping and give out individual payments then the staff are required to put this into the central pot. BUT if you keep the auto tipping as it is and give additional payments to anyone you thought was over and above then they can keep this. Although not happy with this system not sure what we as passengers can do.