The general idea of using ICO to stop the engine is that it removes fuel from the vicinity of the engine and makes it much less likely that (should the ignition be left ON) the engine will start if the prop is manually rotated.
The dead-cut on the ignition switch checks for the (very unlikely) ignition switch failure mode where cutting each of the two ignition circuits works but cutting both doesn't. This test risks damage to the exhaust system. My POH says "1000rpm max" but I never do it because I can't see how the switch can fail in such a way. For the very simple mechanism, it would be a really bizarre internal mechanical malfunction.