I've never quite understood what that option is intended for, when the IAC method seems to do the same job(?) much better.
Anyone care to enlighten me why, or for what sort of scenario, this seemingly archaic thing is still being made available?

This is a feature that we developed for early OS X versions, to allow BIAB to connect to other software. This is before Apple had the IAC bus, and is only applicable to early OS X versions (even earlier than your version!). So you're right, it is no longer needed and could be hidden.

But who knows, maybe Apple will decide that the IAC bus is no longer needed in their next OS release?

And that's saying something!!
Interesting, but why suggest "hidden"? I mean, this seems to confirm what I was getting at, namely that no current versions of BBox will run on systems for which this thing was included. Makes you wonder why it's just not removed altogether, then.
Indeed, and stranger things have certainly happened, I'm sure... in which case you'll be wisely removing that thing too... right?