Thai boxers do typically drop one of their hands when executing a roundhouse kick. The reason, as you surmised is for both leverage and added power.
Though you were referring only to the lead side roundhouse kick, and the dropping of the lead hand, the same is true for the rear legged roundhouse kick.
For one, roundhouse kicks from the lead leg are naturally weaker because they do not benefit anywhere near as much from the body's rotation during the kick. When the lead hand "drops" it does not actually just drop, but is swung.
The swing is to: generate additional power while pivoting and help the boxer maintain his/her balance.
A third and not well known reason (unless you study Muay Thai) is that the swing arm can be used to interfere with your opponent. You are sticking it in his face and brushing either his punches or guard aside as you kick. Further, the arm may drop, but the shoulder does NOT! When a Thai boxer kicks, he is leaning away from the kicking leg.
Doing this adds more of the body's weight to the force of the kick AND gets the boxers head OUT OF THE WAY of a counterstrike.
Also, ONLY ONE arm drops! The other should come up in front of the face in a high guard position that places the elbow near jaw level and the hand practically above the head. This creates a more solid barrier. The shoulder of the arm that is dropped protects the jaw on the other side.
Travis S. Lutter is an American mixed martial artist who won the The Ultimate Fighter 4 reality show. His UFC record, not including his exhibition wins on The Ultimate Fighter 4, is 2–4. He is a black belt in Brazilian Jiu-Jitsu under Carlos Machado. http://travislutter.com