Good questions, Langdale.
As for the usefulness of that "muslin sandwich", I'd recommend reading Pat Chapman's book about Earl and Floyd Willits, if you haven't done so. Beyond being a good biography, it covers quite a bit of their construction techniques and also covers repair methods. There's no way to re-impregnate the cloth between the planking without removing all the planks on one side or the other... and so it may not serve much of a point at this time with drying and cracking. But the brothers probably would've eliminated it to save weight, if they didn't think it served some purpose.
Even if it only kept water out just until the boards swelled completely shut... that would be cause enough to use it, if I were them.
As far as double-planking being out of date, you bet. 90% of everything on these forums has long been obsolete and superseded by fibergass, plastics, and any number of indestructible, lightweight, cheap and fast to produce boats. And to that list I add soulless; the only reason we continue to keep coming back and saving these old things.
Lastly, I don't know of anyone using the double-planked method these days.