This is the first time I have heard of this.
Presumably, it would be on the west side of Oskaloosa, perhaps starting with a trumpet interchange on IA 163 northwest of the IA 92 interchange and then heading northeast. There are no public plans yet, but I would bet that the junction with the existing route will be north of the railroad overpass to avoid another crossing and because there are quite a few houses along 63 south of there.
A bypass would make 63 stoplight-free (but not stop-sign-free) from Bloomfield Ottumwa to Toledo.
(EDIT: I forgot about the still-existing lights on 63 south of the Ottumwa bypass.)