No need to remove your Powermasters. In CAPPilot's diagram showing the TIU in passive mode, substitute the ZW symbol with a Powermaster. All of your LCS devices will operate.
The diagram shows a single TIU output channel (# 2) being used. The TIU out of the box has channels #2 and #3 set to fixed output. Since you have three Powermasters, you'll have to use three of the TIU's channels and configure the TIU to set fixed output on channels 1 and 4 (consult the manual) (*). The single TIU in passive mode will inject the DCS signals into your track wiring for each of the Powermasters. One TIU channel per Powermaster.
If you are able to run your DCS locos, then all is good. If you have DCS problems, the next step is to use the TIU in active mode. In this case, your three Powermasters feed power to three TIU input channels, through the TIU, and the TIU output channels are connected to the track.
If you still have DCS signal problems in active mode, then its time to consider reworking your layout's wiring. My club went through several attempts getting reliable DCS signals through large modular layouts before rebuilding all modules with a wiring harness that uses *_discrete_* ground and power buss wires for each loop. The "common ground" is connected only at the TIU's ouputs. Crossing tracks and sidings are fully insulated (both outside and center rails) to keep the TIU's output channel signals separated. Track drops are in every 4 ft. module. This has, for the most part, worked well.
(*) I haven't tried a passive TIU with channels 1 and 4 in variable mode. It may work.
