I am pretty sure that one of my older phones used the headphones as an antenna?
Again, my Galaxy Nexus doesn't seem to have this functionality, although that's merely me trying to locate the pre-baked application and not finding it. So you're probably right about the ISV not including it.
My last two HTC Android phones had this functionality (the Desire and now the One S). Never used it, but this would be a situation where it could be handy. Although if you're in a car, the car radio probably has better reception.
I had previous Windows Mobile phones (Motorola Q and an HTC Touch Pro) that would pick up AM/FM radio so long as headphones were plugged in. I think my Samsung Focus was able to do it as well.
Again, my Galaxy Nexus doesn't seem to have this functionality, although that's merely me trying to locate the pre-baked application and not finding it. So you're probably right about the ISV not including it.