It was related to when Tomcat was behind an httpd reverse proxy. In some circumstances the URI was partially encoded so the %2F handling was necessary to undo that encoding.
It create a number of security issues which were fixed around the same time CVE-2007-0450 was fixed. For background, look at the ForwardURIxxx options in the mod_jk docs: http://tomcat.apache.org/connectors-doc/reference/apache.html That covers a few cases where you still might want this feature (but because of the possible security issues I'd avoid it if at all possible).
The default behaviour is now httpd to pass the URI to Tomcat unchanged and for Tomcat to treated encoded characters as exactly that.