Nothing personal at all, and I didn't take it that way even before I read the last line.
Everything you say is valid. The benefit of Auto ISO is marginal when it still lets the camera set a shutter speed unusably long before it takes effect. I guess it's more useful in S mode, where you are more likely to hit the low end of the f/stop scale (and still able to take a useable picture), at which point it ups the ISO for you. I guess in the mind of somebody (or more likely the agreement of some design board) at Nikon it makes sense the way they did it.
Personally, I havn't found much value in it. Maybe somebody can give some examples of where it's really useful.