Yeah, in the blended category, a blend of straight whiskeys can be flavored/colored with caramel & sherry, which I think is consistent with what most would expect.
In the Bourbon category, it is my understanding that flavoring/coloring cannot be added at any point without changing the class/type. So for Bourbon, the only meaning added by the term "straight" is that it has been in oak barrels 2+ years (barrel-finishing Bourbon in a sherry or other used barrel might be a way to add flavoring to Bourbon without changing the category).
For other whiskeys, "straight" has more meaning.
For "rye whiskey," for example, flavoring and coloring can be added and does not need to be disclosed as long as it falls within the "HARMLESS COLORING/FLAVORING/BLENDING MATERIALS" and is less than 2.5% of volume (limited to caramel for coloring, and for flavoring vaguely defined as whatever is natural and customary).
The practice of adding color/flavoring is prohibited for straight whiskeys (blend of straight whiskeys being sort-of an exception).
So that brings me back to this interpretation of what is "straight" (and therefore what is not "straight"): § 5.22 (b)(1)(iii) Whiskies conforming to the standardsprescribed in paragraphs (b)(1)(i) and (ii) of this section (this is the section that defines Bourbon, rye, corn whiskey, etc), which have beenstored in the type of oak containers prescribed, for a period of 2 years ormore shall be further designated as “straight”.
If your rye whiskey is 2+ years old, and has no coloring/flavoring added to it, it shall be designated as straight. I am not a lawyer, but "shall" sounds more like "will be designated" than "can be designated at the producer's discretion."
If your rye whiskey is 2+ years old, and does have coloring/flavoring, then it is not straight.
Yes, to the consumer, "straight" generally means the good stuff. And, yes it tells you if the product is 2+ years old or not.
But I think the more meaningful aspect of the modifier "straight" (for whiskeys other than Bourbon) is that it tells you if the producer has added flavoring/coloring or not.