The ability to see what 404 pages visitors are hitting is very important. We had an awful lot of hits to /threads/ which I can now redirect to the /forums/ path thanks to this addon. This is very useful.
Unfortunately, the add-on does bad things for website's ranking by search engines.
Search engines will consider missing pages okay as this add-on uses HTTP 301 redirect to get to nice error page (which returns HTTP 200 code).
This will clutter search index of the website with lots of different links leading to same 404 page that are considered valid by the search engine. This may lead to your website lowering in search results.