So why did IH build/sell them?

Precisely because they looked neat and sounded cool.  Some people at Harvester thought they could sell it as a premium, prestige product to people who wanted a tractor with an image like that. 

actually ih never went broke,but they did lose alot of money,in the last two years proceding the agriculture line being bought out by tennaco.it was the combination of developing a new line of ag equipment( '88 ,and magnum series tractors,rotor combines, tillage equipment) and the down turn in the ag sector,and a strike. 
  so differences between 15's and the other '66s was basically centered around the transmission, the 15's had a planetary final drive and a three speed tranny and the pto had a different type of valve in it,also the 1566 i was told had a different head design.
  we had all the '66s at one time or other.but the 1566 was the most memorable,mostly bad memories,it could pull a barn down the road but not for very far before the rearend would go out.the cab was rudimentery, at best, the rear end filler,vent, was in the cab,so when i was running a implement with alot of hydraulic movement,it would fill the cab with oil fumes.  the air conditioner looked like a after thought the condenser was attached to the back of the cab and was cooled by two electric fans facing up, open to all the weather.   the exhaust stack was at the same height as the cab filter which was in front at the top of the cab,which would fill the cab full of diesel fumes,they came out with a 8 inch stack extension which at least put the exhaust over the cab.   lights were pretty minimal,and the cab was pretty noisy,they came from the factory with one of those wedge radios,it's purpose was to try to convince people that the cab was quite enough that you could hear the thing,wrong.they were a pretty nice riding machine,for the 70's any way.
 did lot of plowing and vripping with the 1566.still have some flashbacks.

The whole reason for the IH V8 rowcrop was to match Massey and give farmers something "cool" to drive. 
http://tractorshop.com/articles/ih.html

Been running and still am running IH's (666, 786, 806, 1466, 2 x 3688's).  Used them for years along with IH combines, planters, etc.   Well satisfied and would not do things diferently if I had it to do over again.  Have not experienced any of the horror stories that some on here have had.  For example, have a 1976 IH1466 with 4100 hours which was purchased in 1977.  Has been used for planting, chisel plowing, discing and pulling a round baler.  Nothing has ever been touched internally on it.  Same clutch and TA that come in it.  Nothing to complain about there.