Doesn't look like the same barrel as the SU-16. Distance between the chamber and 'bulge' is distinctly different between the two.
In my opinion, it does serve a harmonics purpose. Think of snapping a piece of pasta. In this case, it'd be held by one end (barrel nut) and the midpoint (gas block), then flexing (firing harmonics on barrel/forces from weapon recoiling and distributing force). It's easy to bend and snap a piece of pasta, and it'll usually snap close to the midpoint, where stress is greatest. Reinforce the midpoint, and it's harder to snap/bend. Easy mental image, right? It'll have a moderate effect on the behavior after the gas block too, depending on how rigidly those components are held in place WRT the receiver.
Could be wrong, but that is my distinct impression. Obviously KelTec wouldn't need to cut the bulge out if they didn't really go to pencil town on the barrel, but one of their big selling points is how overall and comparatively light their weapons are. It'd be nice if they offered a medium and heavy contour barrel and if the barrel could be a bit easier to swap than say, a Sub2k.