I think the ModIO is being used for the MPG so it makes sense to also use the analogue Ins for the axis select. Peter used a rotary switch with resistors soldered between positions and that allowed him to read multiple positions on one analogue input. Mach was short of I/O back in the old days as you know and it was a way that worked well.
HotKeys I have never liked, I have used them when it was the only option but I had a real disdain for them and was glad when I could move on to real inputs.
I think why they are using a mix is the ModIO just doesnt have enough inputs for all that is done on that pendant, could be wrong though as it has been a long long time since I looked at ModIO.
Hood
Edit
Oh and yes the MacroPump will be needed, the ModIO interface only gets the analogue ins to Mach but something has to tell Mach what they are for, could be the macropump or a Brain but Macropump works well for things like that.