Address PR comments.

agent/consul/discoverychain/compile.go

@@ -1007,15 +1007,15 @@ RESOLVE_AGAIN:
 		// Default mesh gateway settings
 		if serviceDefault := c.entries.GetService(targetID); serviceDefault != nil {
 			target.MeshGateway = serviceDefault.MeshGateway
-			target.TransparentProxy = serviceDefault.TransparentProxy
+			target.TransparentProxy.DialedDirectly = serviceDefault.TransparentProxy.DialedDirectly
 		}
 		proxyDefault := c.entries.GetProxyDefaults(targetID.PartitionOrDefault())
 		if proxyDefault != nil {
 			if target.MeshGateway.Mode == structs.MeshGatewayModeDefault {
 				target.MeshGateway.Mode = proxyDefault.MeshGateway.Mode
 			}
-			if target.TransparentProxy.IsZero() {
-				target.TransparentProxy = proxyDefault.TransparentProxy
+			if !target.TransparentProxy.DialedDirectly {
+				target.TransparentProxy.DialedDirectly = proxyDefault.TransparentProxy.DialedDirectly
 			}
 		}
 

agent/proxycfg/state_test.go

@@ -2359,7 +2359,16 @@ func TestState_WatchesAndUpdates(t *testing.T) {
 						{
 							CorrelationID: "discovery-chain:" + dbUID.String(),
 							Result: &structs.DiscoveryChainResponse{
-								Chain: discoverychain.TestCompileConfigEntries(t, "db", "default", "default", "dc1", "trustdomain.consul", nil),
+								Chain: discoverychain.TestCompileConfigEntries(
+									t, "db", "default", "default", "dc1", "trustdomain.consul", nil,
+									&structs.ServiceConfigEntry{
+										Kind: structs.ServiceDefaults,
+										Name: "db",
+										TransparentProxy: structs.TransparentProxyConfig{
+											DialedDirectly: true,
+										},
+									},
+								),
 							},
 							Err: nil,
 						},
@@ -2396,7 +2405,7 @@ func TestState_WatchesAndUpdates(t *testing.T) {
 											Proxy: structs.ConnectProxyConfig{
 												DestinationServiceName: "db",
 												TransparentProxy: structs.TransparentProxyConfig{
-													DialedDirectly: true,
+													DialedDirectly: false, // This is set true by the service-defaults entry above.
 												},
 											},
 											RaftIndex: structs.RaftIndex{
@@ -2455,7 +2464,7 @@ func TestState_WatchesAndUpdates(t *testing.T) {
 										Proxy: structs.ConnectProxyConfig{
 											DestinationServiceName: "db",
 											TransparentProxy: structs.TransparentProxyConfig{
-												DialedDirectly: true,
+												DialedDirectly: false,
 											},
 										},
 										RaftIndex: structs.RaftIndex{