Which action must be taken on the Cisco FMC when a packet bypass is configured in case the Snort engine is down or a packet takes too long to process?

"Inspect Local Router Traffic" is a setting to control whether self-generated traffic by the FTD itself is inspected, not a mechanism for bypassing Snort due to engine failures.

Automatic Application Bypass (AAB) is the specific Cisco Firepower feature designed to allow packets to bypass the Snort inspection engine under conditions of high load, resource exhaustion, or engine failure. This ensures network connectivity and prevents traffic drops when the Snort engine cannot keep up with processing or is unavailable.

Configuring fastpath rules to bypass inspection is a deliberate performance optimization for trusted traffic, managed via prefilter policies, and is not an automatic fail-safe mechanism triggered by Snort engine failures or overloads.

While the concept sounds related, "Automatic Application Bypass" is the precise terminology for the feature that handles packet bypass during Snort engine failures or processing delays, not a "Bypass Threshold policy for failures."