So farsight did this because he *did* know what he was doing
When the guides talk about 'The source' being interlaced, they mean the original source. In our case the original source is film, whic is 24 progressive frames per second, which was then transferred to laserdisc and made into a 30fps interlaced mishmash.
The IVTC process recreates the original film frames with no quality loss by extracting the matching interlaced halves and putting them back together.
If the 'original source' was video (i.e. it was shot using an interlaced video camera in the first place) then you cannot do an IVTC, and any form of de-interlacing does cause a quality degredation as there are no original progressive frames to get back to.
So for stuff that originated on film, doing an IVTC is a must, for stuff shot on video, you can only get a compromised image by deinterlacing and averaging and so forth.