1. It's a bug.
2. It's an attempt to integrate the logic for fix_cache_key into core so people don't need to run that separate util if they switch servers.
3. This is what it was doing:
- if the directory named by SESSION_WRITE_DIRECTORY doesn't exist, it was detecting what folder the script was running in so that it could guess what the correct "store root" was, and then appending /cache to it (since if the one in the db didn't exist then the best guess after that is /cache). The bug is that the file doing the detection is 2 levels under the admin folder, and thus was *incorrectly* guessing that it needed to use /admin/includes/ instead of just /

It's easy to avoid encountering the bug:
- create the /cache folder (or any other writable folder)
- set SESSION_WRITE_DIRECTORY to point to it

The fix to have it guess the correct /cache folder is to change the file I mentioned above, and alter the realpath(dirname(__FILE)) to be realpath(dirname($_SERVER['SCRIPT_FILENAME'])) .... but the redirect will still happen if you don't actually have the /cache folder.

But I'm reluctant to commit a code fix for the above, because I'm wondering if the original need for this has maybe expired, and even using fix_cache_key may no longer be necessary, given that sessions are now only stored in the database, not the filesystem.
Further research is required to determine the optimum solution.