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> but then, what would be the use case of PyIter_Check
> outside of python core?
You could still use it anywhere. It will give a correct result in the cases of extension modules, builtin types, and new-style classes. It will give a false positive in the case of old-style classes. The latter case doesn't seem to be of much consequence (there is a still a TypeError raised when next() is called), so you just find out a bit later than you otherwise would (I believe that is why this is why we haven't gotten a bug report in the 13+ years this code has existed).
The feature is imperfect, incomplete and not as useful as it could be.
But this ship sailed a long time ago. It is far too late for redesign (and risking unintended breakage).
FWIW, PyIter_Check() is used several times in the Python core: sqlite, cPickle, and iter(). In those examples, there seem to be no adverse consequences for the false positive because we still get a TypeError downstream when the actual call is made to next().