Like anything else you can take it to extrems.. In my own experience you don't have to go to those extremes to see the benefits. But some people do, just to see how far they can take it. Like lifting weights. Most people get good results and have good benefits from it., then there are guys like this. Is it worth it? They think so. If you don't like it, don't do it. Lots of people think martial arts in general is stupid. Spending thousands of dollars and a life time of training for a theoretical fight you will never have.
Best not to judge others.
Is hardening your knuckles/fist worth it? Sure. Is doing it to the point you disfigure it, and more than likely give yourself arthritis (which will also prevent you from making a proper fist, and mess with your grappling/locks)? Not in this day and age.
I was watching a U-tube video on using Makiwara. The video was of a 10th Dan Grand Master. In it he showed a picture of his hands with very calloused first two knuckles taken in 2003 when he was testing for 7th Dan. Video is two years old according to notes. He is shown in the video using a makiwara. When showing how to strike makiwara in appears his callouses have almost disappeared.
Callouses I have acquired over my life have eventually disappeared after the irritation ceased. So the vanishing callouses should not be surprising. However, it did surprise me, none the less. Another life lesson learned.
There is a way to strengthen the knuckles and the hand without deforming it. In this age there is really no need to take it to the extreme simply because people do not wear clothing with amor woven into it.
Besides, Iron Fist is conditioning. A person would still need punching and fighting skills to make use of the conditioned hand.