I think you're on the right track here: the multichannel analog input is 5.1 only, so you aren't going to have a 7.1 analog source to deal with.

If you have a 7.2 setup and want to use the ICBM to create discrete left and right subs, you could use the 950's internal bass management to handle the surround channels (all four of them) and possibly even the center, then set the fronts to large and steer the front pre-outs and sub pre-out through the ICBM-1.

The ICBM was developed prior to the appearance of Pro Logic IIx. At the time, most systems were 5.1 and the few that were going beyond that were using Dolby Digital EX or similar processing to create a mono back surround channel. At the time, it was a practical choice to implement 6.2.