It's a little ambiguous, but the word before is important -- "Sampling certain workloads with IBS" -- so that "with" clause is talking about the sampling method, not the workload style.

I think you are right. From the context the issue was found using IBS, not that the 20 year old code was doing IBS.

The issue is a dummy op used to work around an issue in old hardware gets counted as C-State residency, and "A large C-State residency value can prime the cpuidle governor to recommend a deeper C-State". So this dummy op used during switching C States makes the CPU look more idle than it is, causing more low power mode than there should be.