From my own experience shooting BIF for the last three years with my 100-400 I can say that I have witnessed some very odd effects in the viewfinder when accidentally using the wrong IS mode. I can also say that there have been times when I have experienced very poor IQ with absolutely no logical reason to explain it. I'm talking in particular about softness throughout the frame or a sort of halo around bright, high contrast subjects. This has happened with different bodies - 50D, 1D3, and in circumstances where I have absolutely not saturated the sensor and leaked charge from pixel to pixel. Whenever I see such problems and bench test the lens, using a tripod, there is no fault to be found with the AF performance or the IQ. Looking back, I think the most likely explanation is that I had been using IS when it really would have been better not to. Unfortunately the EXIF data does not record whether or not IS was used, so I can never be sure.
Although I have never used one, one of the finest birding lenses for those not wishing to spend over £1,000 is reputed to be the 400/5.6L. It is sharp wide open and focuses fast. It does not have IS and that does not appear to stand in the way of achieving excellent results. With that in mind, and wondering whether adding the lens to my collection would be the solution to my spurious IQ problems, this year I have been disabling IS for pretty much all my BIF shooting. I would say on reflection that my keeper rate has increased.
So, all very anecdotal and unscientific, but I really believe that IS is best left off for tracking random motion, motion which is not complementary to the abilities of the IS system (diagonal pans, for example), or when shooting at high shutter speeds as one might when using the unstabilised 400L. Now, is there any sort of rational explanation for my own findings? I think it might well be contained in Thom Hogan's article. Maybe newer IS systems are better than the 100-400, but given that this thread is about the 100-400 and its first generation IS it does not seem unreasonable to me that it is not state of the art and may have limitations at high shutter speeds.
Here is a recent example of a hand held panning shot at 400mm and 1/800, with IS off and shown at 100% with no sharpening adjustments. Since it is a simple horizontal pan I guess IS mode 2 might have been OK, but what would happen if the plane started to climb? I'd be screwed. By the look of things I don't think I needed IS anyway. Others may disagree.
How about this one - which panning mode should I have used? Well none were appropriate. Maybe viewed at 100% my panning is not quite perfect, but I don't think IS would have done me any favours at all..
Sure, both shots need some edits, but they don't need IS, IMHO.
Now, at the other end of the spectrum, when shooting at low shutter speeds and long focal lengths I'll happily take the best IS on offer. Here's a hand held shot at 400mm and 1/60. Of course, viewed at 100% this is testing the IS massively beyond the 2 stop performance expected of it. Of course, it didn't quite rise to the challenge, but it hasn't done a bad job, especially considering I was squeezed into an awkward shooting position, hemmed in on both sides by people while seated in a crowded grandstand.
Now for a change of subject, this was shot at only 105mm and 1/160, but IS was turned off since the bikes were moving in all sorts of directions and IS would have screwed things up. Even if it had worked, I'm not sure it would have helped.
So, like Thom Hogan says, turn it on when you need it. Turn it off when you don't.