It depends on weather the system is a constant flow or a variable flow system.
Three-way valves by their nature bypass supply chilled water into the return line, causing chilled water return temperatures lower than design. This exacerbates low delta -T problem. Therefor you want to use a minimum of three-way valves in variable flow system. Two-position bypass valves across supply and return lines, strategically situated and controlled properly is preferred to ensure minimum flow.
As I understand it, functionally there is no difference whether you use the mixing valve or diverting valve; however, I have seen more often than not, the mixing valve in these three-way valve applications (where the valve is in the return piping vs. the supply side of the coil where it would be a diverting valve). I was told that this is because a mixing valve is typically less expensive than a diverting valve.
stevenw: I'd like to hear more about how exactly 3-way diverting valves give better cooling coil temperature control.
To reiterate the predominance of 3-way maixing valves, it's the reason you see two-way valves traditionally placed on the return side of coils (where the mixing valve would go as opposed to the diverting valve).
Ifc09: Don't forget, when using the 3-way mixing valve, you need a balance valve in the bypass line which matches the pressure drop of the coil so that a fluid "short circuit" won't occur.
